The Calculator

This simple calculator introduces the basics of financial analysis for Florida real estate. The calculator simulates the cash flow of the property from purchase to the following 30 years, where you can model and visualize:

1.-Rental income and breakdown of property expenses (including accounting service expenses)

2.-Taxes (including income tax and capital gains tax by simulating a future sale of the property at a higher value than it was purchased)

3.-Mortgage loan payments

4.-Evolution of property value

5.-Evolution of the value of mortgage debt

6.-30-year annual and consolidated total property cash flow

Additionally, you will obtain the following indicators for the financial evaluation of the property:

1.-Capitalization Rate or annual return on rental cash flows

2.-Total Annual Return (annual return on rental cash flows + annual return on property appreciation)

3.-Value you must bid on the property to get a desired target cap rate

Remember that Real Estate Financial Intelligence S.P.A. manages a database of thousands of Florida properties and performs an analysis of up-to-date market returns so it can help you improve your profitability in the purchase of your next property in Florida at no additional cost!

Financial Glossary

Property value: Price of the property paid by the investor

Rent: Monthly amount of rent the property should get according to market conditions

Net Operating Income (NOI): Is the revenue left from rental income minus operating expenses

Net Operating Income=Rent-Vacancy-Property tax-Management fee-Insurance-Maintenance & Repairs-HOA-Basic services

Investment amount: It is calculated as follows:

Investment amount=Property value+Acquisition expenses+Initial Repairs

Homeowners Association (HOA): Expenses for the maintenance of common areas and amenities, among others. This expense is not applicable in all cases. For example, there are homes where this expense does not apply. It must be input as a monthly amount ($), not in percentage

Property Tax: Annual tax on the value of the property. It is expressed as a percentage of the value of the property. A reference value is 1.5%

Vacancy rate: It is the percentage of time that the property is unoccupied with no tenant. A reference value is 5% vacancy rate for traditional or long-term rentals

Management Fee: A third-party property management fee (tenant search, collection and transfer of rent to the landlord, maintenance, etc.) expressed as a percentage of rental income. A baseline is 10%

Maintenance & repairs: This is the annual expense of maintaining the property. It is expressed as a percentage of the value of the property. This number varies depending on the year of construction of the property, the older the higher. A reference value is 1%

Cash Flow: Property cash flow represents how much money you have left over from your rent after you have paid the property expenses and loan payment. It is convenient that this figure is positive. It is calculated as:

Cash Flow=Net Operating Income-Loan payment

or

Cash Flow=Rent-Vacancy-Property tax-Management fee-Insurance-Maintenance & Repairs-Basic services-Loan payment

Total Cash Flow: It is the final cash flow after paying accounting services and taxes. It is calculated as:

Total Cash Flow=Cash Flow-Accounting services-Taxes (ordinary income, capital gains)

Capitalization Rate (Cap. Rate): A measure of the rate of return on a property for investment widely used in the real estate industry. It is calculated as:

Capitalization rate=Net Operating Income/Property Value

Although strictly speaking it is preferable to use the Internal Rate of Return (IRR) to evaluate an investment, the Capitalization Rate allows to obtain a return quickly and easily.

Price-to-rent ratio: It is a measure of the relationship between the property value and its annual gross income. For reference, if the resulting number is greater than 12, then the property is expensive. It is calculated as

Price-rent=Property Value/Estimated annual rent

1% rule: This rule states that the monthly rent should be at least 1% of the property value (including initial repairs). That is, if the property is worth $500,000 then the gross monthly rent should not be less than $5,000.

Monthly income ≥1%*property value

IRR: Corresponds to the annual return considering future investment cash flows. It is a better measure than the capitalization rate and serves to compare with other types of investments, however, it is very common in the industry to use only the capitalization rate to evaluate the profitability of the investment since it is more direct and simpler to calculate

Cash-to-Cash Return: It is the return of the resulting annual cash (before taxes) on the amount of the investment

Cash-Cash Return=Net Operating Income-Loan payment/Investment Amount

Ordinary income tax: Levies the net income generated by the property. Annual tax paid to the U.S. IRS

Incorporation fee: It is the initial expense charged for the registration of the entity. This expense is charged by the accountant (or the accounting consulting firm you hire) and is charged only once

Renewal Expense: This is an expense that is paid once a year, where the Florida Department of State is informed that the entity remains “active”

IRS Annual Return: This is the annual expense charged for filing the return to the U.S. Internal Revenue Service. This expense is charged by the accountant (or the accounting consulting firm you hire) and is usually charged only once a year

Estate Tax: This federal tax is triggered upon the death of a property owner. It can go up to 40%, and it is applied according to the percentage of ownership interest. For example, if a member of the LLC with 30% interest dies, the tax rate might be 40% over 30% of the value of the property.

Capital Gains Tax: It is the tax on the gain that occurs when selling the property and generating an economic profit between the purchase and sale price

Loan payment: It is the monthly payment to the bank on the mortgage loan obtained to pay for the property. It consists of debt amortization + interest

Acquisition costs: These are the expenses associated with the purchase of the property. A reference value is 6% of the purchase value of the property (less if you do not borrow). These expenses include the bank commission, property inspection, county fees associated with recording the sale paperwork, etc.

Some acquisition costs are negotiable. For example, when using a bank for a mortgage loan, you can negotiate acquisition expenses with the bank to obtain the best commercial terms.

Insurance: Corresponds to the property insurance premium and is expressed as a percentage of the value of the property. In general, it protects against structural damage, natural phenomena, etc. It adjusts according to inflation. A general annual reference value is 0.4%.

Bank loan: It is the percentage of the property that is financed by the bank. For example, if half of the property is bought in cash and the other half with a bank loan, this value corresponds to 50%

Inflation: It is the increase in the prices of goods and services in an economy. It is expressed as a percentage (annual). A reference value is 2% (remember that with higher inflation the price of housing also rises, as well as rent and expenses)

Interest rate: It is an amount charged to the debtor and is expressed as a percentage of the amount lent (annual).

Appreciation: It is the annual rate at which the value of the price of the property increases. The appreciation of real estate in Florida over the last 10 years is +10% every year

Cost of Sale: Expenses associated with the sale of the property, e.g., agent commissions, title examination, state transfer stamp tax, title insurance to protect against future after-sale legal actions, HOA letter, transfer taxes, among others. It is expressed as a percentage of the value of the property. A reference value is 11%

Rent/Ft2: Measure of the rental value per unit area of the property. It can be indicative of the year of construction of the property in relation to other properties in the area

Estate settlement costs: Expenses deductible from the estate for the payment of estate tax. For example: attorney and accountant fees, court costs, funeral expenses, etc. A reference value is 5%

Discount rate: It is the rate of return expected by investors for investments of similar risk which is used to determine the present value of the future cash flows of a project. A reference value is 5%

Net present value: It is the value of the projected net cash flows of an investment in present value

Guaranteed return: Promotions that property development companies sometimes grant to their buyers where they are guaranteed a fixed annual gross income for a period of time

Total discount amount: Promotions that property development companies sometimes grant to their buyers where they are guaranteed discounts for a period of time that are generally 0% management fees

CASE LLC AS SOLE PROPRIETORSHIP

LLC TREATED AS A SOLE PROPRIETORSHIP FOR U.S. FEDERAL INCOME TAX PURPOSES. THE TAX CALCULATION ESTIMATES HAVE BEEN PREPARED IN ACCORDANCE WITH U.S. TAX LAW USING A FINANCIAL MODEL CERTIFIED BY AN INTERNATIONAL CONSULTING AND ACCOUNTING FIRM. THESE ESTIMATES ARE INTENDED SOLELY FOR THE LLC MEMBER(S) WHO ARE NONRESIDENT ALIENS FOR U.S. FEDERAL INCOME TAX PURPOSES AND ASSUME NO ADDITIONAL U.S. INVESTMENTS OR U.S. -SOURCE INCOME. NOTE: THESE ESTIMATES DO NOT INCLUDE TAXES IMPOSED BY THE INDIVIDUAL’S FOREIGN COUNTRY OF RESIDENCE. YOU ARE SOLELY RESPONSIBLE FOR CONDUCTING YOUR OWN DUE DILIGENCE AND ARE STRONGLY ENCOURAGED TO CONSULT WITH YOUR TAX AND FINANCIAL ADVISORS REGARDING THESE TAX CALCULATION ESTIMATES BEFORE MAKING ANY INVESTMENT DECISION.

Cautionary Statement Regarding Forward-Looking Information: Our products and services contain forward looking statements and predictions that are subject to various risk and uncertainties and that express our opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results, in contrast with statements that reflect historical facts. Forward-looking statements are based on certain assumptions, discuss future expectations or state other forward-looking information. Our ability to predict future events, actions, plans or strategies is inherently uncertain. Although we believe that the expectations reflected in our forward-looking statements are based on reasonable assumptions, actual outcomes could differ materially from those set forth or anticipated in our forward-looking statements. Readers are cautioned not to place undue reliance on any of these forward-looking statements.

 General Information and Investment Disclaimers: The information contained on this website and in any accompanying financial reports is provided for general informational purposes only and does not constitute an offer to sell or a solicitation to buy any property, security, or investment. All representations of financial performance—including but not limited to cap rates, internal rate of return (IRR), cash-on-cash returns, and projected income—are estimates based on assumptions believed to be reasonable at the time of preparation. Actual results may vary significantly and are not guaranteed. Investing in real estate involves risk, including potential loss of principal, market volatility, changes in operating expenses, and other unforeseeable variables. No statement herein should be interpreted as a guarantee of income, appreciation, occupancy, or resale value. You are solely responsible for conducting your own due diligence and are encouraged to consult with your legal, tax, and financial advisors prior to making any investment decision. Real Estate Financial Intelligence S.P.A. is a real estate brokerage in Chile. No fiduciary or agency relationship is created by your use of this website or receipt of any materials unless and until a written agreement is signed. All real estate advertising is subject to the Fair Housing Act and applicable Florida law. To the fullest extent permitted by law, Real Estate Financial Intelligence S.P.A. and its agents disclaim any and all liability for damages arising out of or related to the use of, reliance on, or inability to use the information provided, whether in contract, tort, or otherwise. This includes, without limitation, direct, indirect, incidental, consequential, or punitive damages.

Limitation of Liability: In no event shall service provider be liable to customer or to any third party for any loss of use, revenue or profit or loss of data or diminution in value, or for any consequential, incidental, indirect, exemplary, special, or punitive damages whether arising out of breach of contract, tort (including negligence), or otherwise, regardless of whether such damages were foreseeable and whether or not service provider has been advised of the possibility of such damages, and notwithstanding the failure of any agreed or other remedy of its essential purpose.

No Assurance of Financial Outcomes: All financial calculations, estimates, and projections presented are hypothetical in nature and provided solely for illustrative purposes. They are based on assumptions that may not reflect actual future performance. No representation or warranty, express or implied, is made regarding the accuracy, completeness, or achievability of any projected outcomes. These calculations do not guarantee any income, return on investment, appreciation, or financial results of any kind.

Disclaimer of Warranty: EXCEPT AS EXPRESSLY SET FORTH HEREIN, THE PRODUCTS AND SERVICES PROVIDED BY Real Estate Financial Intelligence S.P.A. ARE FURNISHED AS IS, WHERE IS, WITH ALL FAULTS AND WITHOUT WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE, QUALITY, COURSE OF DEALINGS, USAGE OF TRADE, ACCURACY, QUIET ENJOYMENT OR NONINFRINGEMENT, ALL OF WHICH ARE EXPRESSLY DISCLAIMED. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, Real Estate Financial Intelligence S.P.A. DOES NOT MAKE ANY WARRANTY THAT THE PRODUCTS AND/OR SERVICES PROVIDED WILL BE FREE FROM DEFECTS, FAULTS OR ERRORS.

Independent Investigation: You have conducted your own independent investigation, review and analysis of the PRODUCTS AND SERVICES PROVIDED BY Real Estate Financial Intelligence S.P.A., which investigation, review and analysis was done by you and your representatives, including, but not limited to your counsel, accountants, financial advisors, potential financial sources, employees, agents and other authorized representatives (“Representatives”). You acknowledge that you and your Representatives have been provided adequate access to the PRODUCTS AND SERVICES PROVIDED BY Real Estate Financial Intelligence S.P.A. for such purpose. You acknowledge that you have relied solely upon the aforementioned investigation, review and analysis and not on any factual representations or opinions of Real Estate Financial Intelligence S.P.A. (except the specific representations and warranties set forth herein).

CASE LLC AS C-CORPORATION

LLC TREATED AS A C-CORPORATION FOR U.S. FEDERAL INCOME TAX PURPOSES. THE TAX CALCULATION ESTIMATES HAVE BEEN PREPARED IN ACCORDANCE WITH U.S. TAX LAW USING A FINANCIAL MODEL CERTIFIED BY AN INTERNATIONAL CONSULTING AND ACCOUNTING FIRM. THESE ESTIMATES ARE INTENDED SOLELY FOR THE LLC MEMBER(S) WHO ARE NONRESIDENT ALIENS FOR U.S. FEDERAL INCOME TAX PURPOSES AND ASSUME NO ADDITIONAL U.S. INVESTMENTS OR U.S. -SOURCE INCOME. NOTE: THESE ESTIMATES DO NOT INCLUDE TAXES IMPOSED BY THE INDIVIDUAL’S FOREIGN COUNTRY OF RESIDENCE. YOU ARE SOLELY RESPONSIBLE FOR CONDUCTING YOUR OWN DUE DILIGENCE AND ARE STRONGLY ENCOURAGED TO CONSULT WITH YOUR TAX AND FINANCIAL ADVISORS REGARDING THESE TAX CALCULATION ESTIMATES BEFORE MAKING ANY INVESTMENT DECISION.

Cautionary Statement Regarding Forward-Looking Information: Our products and services contain forward looking statements and predictions that are subject to various risk and uncertainties and that express our opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results, in contrast with statements that reflect historical facts. Forward-looking statements are based on certain assumptions, discuss future expectations or state other forward-looking information. Our ability to predict future events, actions, plans or strategies is inherently uncertain. Although we believe that the expectations reflected in our forward-looking statements are based on reasonable assumptions, actual outcomes could differ materially from those set forth or anticipated in our forward-looking statements. Readers are cautioned not to place undue reliance on any of these forward-looking statements.

 General Information and Investment Disclaimers: The information contained on this website and in any accompanying financial reports is provided for general informational purposes only and does not constitute an offer to sell or a solicitation to buy any property, security, or investment. All representations of financial performance—including but not limited to cap rates, internal rate of return (IRR), cash-on-cash returns, and projected income—are estimates based on assumptions believed to be reasonable at the time of preparation. Actual results may vary significantly and are not guaranteed. Investing in real estate involves risk, including potential loss of principal, market volatility, changes in operating expenses, and other unforeseeable variables. No statement herein should be interpreted as a guarantee of income, appreciation, occupancy, or resale value. You are solely responsible for conducting your own due diligence and are encouraged to consult with your legal, tax, and financial advisors prior to making any investment decision. Real Estate Financial Intelligence S.P.A. is a real estate brokerage in Chile. No fiduciary or agency relationship is created by your use of this website or receipt of any materials unless and until a written agreement is signed. All real estate advertising is subject to the Fair Housing Act and applicable Florida law. To the fullest extent permitted by law, Real Estate Financial Intelligence S.P.A. and its agents disclaim any and all liability for damages arising out of or related to the use of, reliance on, or inability to use the information provided, whether in contract, tort, or otherwise. This includes, without limitation, direct, indirect, incidental, consequential, or punitive damages.

Limitation of Liability: In no event shall service provider be liable to customer or to any third party for any loss of use, revenue or profit or loss of data or diminution in value, or for any consequential, incidental, indirect, exemplary, special, or punitive damages whether arising out of breach of contract, tort (including negligence), or otherwise, regardless of whether such damages were foreseeable and whether or not service provider has been advised of the possibility of such damages, and notwithstanding the failure of any agreed or other remedy of its essential purpose.

No Assurance of Financial Outcomes: All financial calculations, estimates, and projections presented are hypothetical in nature and provided solely for illustrative purposes. They are based on assumptions that may not reflect actual future performance. No representation or warranty, express or implied, is made regarding the accuracy, completeness, or achievability of any projected outcomes. These calculations do not guarantee any income, return on investment, appreciation, or financial results of any kind.

Disclaimer of Warranty: EXCEPT AS EXPRESSLY SET FORTH HEREIN, THE PRODUCTS AND SERVICES PROVIDED BY Real Estate Financial Intelligence S.P.A. ARE FURNISHED AS IS, WHERE IS, WITH ALL FAULTS AND WITHOUT WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE, QUALITY, COURSE OF DEALINGS, USAGE OF TRADE, ACCURACY, QUIET ENJOYMENT OR NONINFRINGEMENT, ALL OF WHICH ARE EXPRESSLY DISCLAIMED. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, Real Estate Financial Intelligence S.P.A. DOES NOT MAKE ANY WARRANTY THAT THE PRODUCTS AND/OR SERVICES PROVIDED WILL BE FREE FROM DEFECTS, FAULTS OR ERRORS.

Independent Investigation: You have conducted your own independent investigation, review and analysis of the PRODUCTS AND SERVICES PROVIDED BY Real Estate Financial Intelligence S.P.A., which investigation, review and analysis was done by you and your representatives, including, but not limited to your counsel, accountants, financial advisors, potential financial sources, employees, agents and other authorized representatives (“Representatives”). You acknowledge that you and your Representatives have been provided adequate access to the PRODUCTS AND SERVICES PROVIDED BY Real Estate Financial Intelligence S.P.A. for such purpose. You acknowledge that you have relied solely upon the aforementioned investigation, review and analysis and not on any factual representations or opinions of Real Estate Financial Intelligence S.P.A. (except the specific representations and warranties set forth herein).