1. What is Investment Property Profit?

Investment property profit is the net income remaining after subtracting all operating expenses and mortgage payments from the rental income. It's a key metric for evaluating the financial performance of a rental property.

2. How Does the Calculator Work?

The calculator uses the simple profit formula:

Where:

• \( Income \) — Total rental income from the property
• \( Expenses \) — All operating expenses (maintenance, taxes, insurance, etc.)
• \( Mortgage \) — Monthly mortgage payment (principal + interest)

Explanation: This calculation shows the cash flow from the property before taxes and depreciation.

3. Importance of Profit Calculation

Details: Calculating profit helps investors determine if a property is generating positive cash flow, assess investment performance, and make informed decisions about property purchases or sales.

4. Using the Calculator

Tips: Enter all values in dollars. Include all income sources and all expenses associated with the property. Mortgage payment should include both principal and interest components.

5. Frequently Asked Questions (FAQ)

Q1: Should I include property management fees in expenses?
A: Yes, all operating expenses including management fees, maintenance, repairs, insurance, and property taxes should be included.

Q2: What if my profit is negative?
A: Negative profit means the property is operating at a loss. This might be acceptable if you expect appreciation or tax benefits, but generally indicates a poor investment.

Q3: Should I include vacancy rate in this calculation?
A: Yes, either reduce your income by your expected vacancy rate or include vacancy as an expense.

Q4: Does this include tax benefits?
A: No, this is pre-tax cash flow. Tax benefits like depreciation would be calculated separately.

Q5: How does this differ from ROI or cap rate?
A: This shows monthly cash flow, while ROI and cap rate measure return relative to investment amount over time.