Profit Formula:
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Definition: This calculator determines the profit earned from a real estate investment by comparing the new property value with the original value and subtracting all associated costs.
Purpose: It helps real estate investors, flippers, and property owners evaluate the financial success of their investments.
The calculator uses the formula:
Where:
Explanation: The profit is calculated by subtracting the original value and all costs from the new property value.
Details: Accurate profit calculation helps investors assess ROI, make informed decisions about property sales, and plan future investments.
Tips: Enter the current property value, original purchase price, and all associated costs (renovation, fees, etc.). All values must be ≥ 0.
Q1: What costs should be included?
A: Include all expenses: purchase costs, renovation expenses, taxes, fees, and any other costs associated with the property.
Q2: Can this show a loss?
A: Yes, if costs plus original value exceed the new value, the result will be negative indicating a loss.
Q3: How is this different from ROI?
A: This shows absolute profit amount, while ROI shows percentage return on investment.
Q4: Should I include mortgage payments?
A: Only include interest portions of payments as costs, not principal payments which build equity.
Q5: How accurate is this for tax purposes?
A: Consult a tax professional as tax calculations may involve depreciation and other factors.