How do you use a DCF real estate calculator online to evaluate different investment scenarios and strategies?

1 Step 1: Find a suitable DCF real estate calculator online

There are many DCF real estate calculators online, but not all of them are reliable or user-friendly. You want to find one that allows you to input and adjust various parameters, such as the holding period, the rent growth rate, the vacancy rate, the operating expenses, the capital expenditures, the discount rate, and the exit cap rate. You also want to find one that displays the results clearly and comprehensively, such as the net operating income, the cash flow before tax, the cash flow after tax, the internal rate of return, the net present value, and the equity multiple. Some examples of DCF real estate calculators online are PropertyMetrics, RealData, and Valuate.

2 Step 2: Enter the basic information of the property

The first step to use a DCF real estate calculator online is to enter the basic information of the property you are interested in. This includes the purchase price, the loan amount, the loan interest rate, the loan term, the amortization period, and the loan fees. These inputs will determine the amount of equity you need to invest and the debt service you need to pay.

3 Step 3: Enter the income and expense projections of the property

The next step is to enter the income and expense projections of the property for the holding period. The income projections include the rent, the other income, and the rent growth rate. The expense projections include the vacancy rate, the operating expenses, the capital expenditures, and the expense growth rate. These inputs will determine the net operating income and the cash flow before tax of the property.

4 Step 4: Enter the tax assumptions of the property

The fourth step is to enter the tax assumptions of the property. This includes the depreciation method, the depreciation period, the tax rate, and the capital gains tax rate. These inputs will affect the taxable income and the cash flow after tax of the property.

5 Step 5: Enter the exit assumptions of the property

The fifth step is to enter the exit assumptions of the property. This includes the exit year, the exit cap rate, and the selling costs. These inputs will determine the exit value and the net proceeds of the property.

7 Here’s what else to consider

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