HP 12C Platinum Financial Calculator User Manual download pdf (Page 12)

12 Real Estate

12c platinum / 12C

RPN Keystrokes

12c platinum

ALG Keystrokes

Display Comments

gÂ gÂ

fCLEARG fCLEARG

200n12gC 200n12gC

Number of periods and

monthly interest rate.

1051.61ÞP 1051.61ÞP

Monthly payment.

$74990+ $+74990³

Þ$ Þ$

-165,776.92

Present value of

payments plus cash

advanced.

240n 240n

129963.35MP 129963.35MP

1,693.97

Monthly payment

received by lender.

200000Þ$¼ 200000Þ$¼

12§ §12³

9.58

Annual interest rate paid

by borrower.

Income Property Cash Flow Analysis

Before-Tax Cash Flows

The before-tax cash flows applicable to real estate analysis and problems are:

• Potential Gross Income

• Effective Gross Income

• Net Operating Income (also called Net Income Before Recapture)

• Cash Throw-off to Equity (also called Gross Spendable Cash)

The derivation of these cash flows follows a set sequence:

1. Calculate Potential Gross Income by multiplying the rent per unit times the number

of units, times the number of rental payment periods per year. This gives the rental

income the property would generate if it were fully occupied.

2. Deduct Allowance for Vacancy and Rental Loss. This is usually expressed as a

percentage. The result is Rent Collections (which is also Effective Gross Income if

there is no "Other Income").

3. Add "Other Income" such as receipts from concessions (laundry equipment, etc.),

produced from sources other than the rental office space. This is Effective Gross

Income.

4. Deduct Operating Expenses. These are expenditures the landlord-investor must

make, by contract or custom, to preserve the property and keep in capable of

producing the gross income. The result is the Net Operating Income.

5. Deduct Annual Debt Service on the mortgage. This produces Cash Throw-Off to

Equity.

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HP 12C Platinum Financial Calculator User Manual Page 12

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