Advanced Projections Methodology

A comprehensive guide to understanding how the Long-Term Profit Timeline is calculated

What's Included in the Calculation

✅ Included

  • •Annual rent increases (configurable %)
  • •Expense inflation (property tax, insurance, maintenance, etc.)
  • •Property appreciation (auto-lookup or manual rate)
  • •Mortgage principal paydown
  • •Cumulative monthly cash flow
  • •Selling costs (realtor fees, closing costs)
  • •HELOC/down payment loan balances

❌ Excluded

  • •Income taxes (federal, state, local)
  • •Capital gains taxes on sale
  • •Depreciation tax benefits
  • •Renovation or improvement costs
  • •Unexpected major repairs
  • •Rent control or local restrictions
Calculation Flow (Month-by-Month)
1

Rent Calculation

Current Rent = Base Rent × (1 + Annual Increase %)^(Years)

Rent increases once per year based on the annual rent increase percentage you specify.

2

Expense Inflation

Inflated Expense = Base Expense × (1 + Inflation Rate)^(Years)

Property tax, insurance, maintenance, repairs, and utilities all increase based on the expense inflation rate.

3

Monthly Cash Flow

Cash Flow = Effective Rent - (Mortgage + Taxes + Insurance + Management + Maintenance + Repairs + Utilities + HOA)

Calculate net monthly cash flow after all expenses, using inflated expense values.

4

Mortgage Balance

New Balance = Old Balance - Principal Payment

Track remaining mortgage balance as principal is paid down each month using standard amortization.

5

Property Appreciation

Value(t) = Purchase Price × (1 + Cumulative Appreciation at t months)

Property value increases based on historical data (auto mode) or a constant annual rate (manual mode).

6

Total Profit

Total Profit = (Sale Price - Selling Costs - Mortgage - HELOC) + Cumulative Cash Flow - Initial Investment

Final profit calculation includes equity at sale plus all accumulated cash flow minus your initial cash investment.

Appreciation Calculation Modes
Auto Mode
(Uses historical market data)

When city and province are provided, the calculator looks up historical appreciation rates from our database.

Calculation Method:

  • • Months 0-12: Exponential curve from 0% to 1-year historical rate
  • • Months 13-36: Exponential curve from 1-year to 3-year rate
  • • Months 37-60: Exponential curve from 3-year to 5-year rate
  • • Months 61+: Constant annual "ongoing rate" (configurable)
Manual Mode
(Fixed annual rate)

You specify a constant annual appreciation rate (e.g., 4% per year).

Cumulative Appreciation = (1 + Annual Rate)^(Months/12) - 1

Example: 4% annual rate for 60 months = (1.04)^5 - 1 = 21.67% total appreciation

Key Inputs & Assumptions
InputDescriptionDefault/Range
Annual Rent IncreaseHow much rent increases per yearDefault: 3.0%
Annual Expense InflationHow much operating expenses increase per yearDefault: 2.5%
Appreciation RateAnnual property value increaseAuto or Manual (1-10%)
Selling Cost Rate% of sale price for realtor and closing costsImported from calculator
Timeline (Years)How many years to project5-30 years
Example: 5-Year Projection

Starting Values

  • • Purchase Price: $500,000
  • • Initial Rent: $3,000/month
  • • Monthly Expenses: $2,200
  • • Initial Cash Flow: $800/month
  • • Down Payment: $100,000

After 5 Years (60 months)

  • • Rent (3% annual increase): $3,477/month
  • • Expenses (2.5% inflation): $2,488/month
  • • Monthly Cash Flow: $989/month
  • • Cumulative Cash Flow: $52,800
  • • Mortgage Paid Down: $35,000
  • • Appreciation (4%/year): $108,326
  • • Property Value: $608,326

Total Profit if Sold

Sale Price:$608,326
Selling Costs (5%):-$30,416
Remaining Mortgage:-$365,000
Equity at Sale:$212,910
Cumulative Cash Flow:+$52,800
Initial Investment:-$100,000
Total Profit:$165,710