1. What is the Investment Growth Formula?

The investment growth formula calculates the future value of a rental property investment, accounting for both the initial investment's compound growth and the annual rental income's contribution to the total value.

2. How Does the Calculator Work?

The calculator uses the investment growth formula:

Where:

• \( \text{Investment} \) — Initial investment amount (USD)
• \( r \) — Annual growth rate (decimal)
• \( n \) — Number of years
• \( \text{Annual Income} \) — Yearly rental income (USD)

Explanation: The first part calculates compound growth of the initial investment, while the second part calculates the future value of the annual income stream.

3. Importance of Future Value Calculation

Details: Calculating future value helps investors evaluate potential returns, compare investment opportunities, and make informed decisions about rental property purchases.

4. Using the Calculator

Tips: Enter initial investment in USD, annual rate as decimal (e.g., 0.05 for 5%), number of years, and annual rental income. All values must be valid (investment ≥ 0, rate between 0-1, years ≥1, income ≥0).

5. Frequently Asked Questions (FAQ)

Q1: What's a typical growth rate for rental properties?
A: Rates vary but often range between 3-8% annually, depending on location and property type.

Q2: Should I include property taxes and maintenance?
A: This calculator shows gross returns. For net returns, subtract expenses from annual income before calculation.

Q3: How accurate are these projections?
A: Projections assume constant growth rate and income. Actual results may vary due to market fluctuations.

Q4: Can I use this for other investments?
A: Yes, this formula works for any investment with initial capital and periodic income.

Q5: What if my annual income changes?
A: For variable income, calculate each year separately or use an average annual income.