Investment Property Calculator Australia
Find out what a rental property could really cost you each week. Enter the price, loan and rent to see your rental yield, cash flow, loan repayments and how your equity could grow.
Estimate only. It assumes steady rates, rent and growth, and doesn't include selling costs or capital gains tax. The tax figure is a simple estimate, so speak with your accountant, broker or adviser before you buy.
Year-by-year projection
| Year | Property value | Loan balance | Equity | Rent collected | Cash flow |
|---|
How this investment property calculator works
Buying a rental property is a bigger decision than the sticker price suggests. The loan repayment is only one piece. You also lose weeks to vacancy, pay a property manager, cover rates, water, insurance and repairs, and put up a deposit and buying costs on day one. This calculator pulls all of that into one picture so you can see what the property would cost you each week before you commit.
Enter the price, deposit, loan rate and the weekly rent a tenant would pay. The headline figure is your cash flow per week: rent collected, minus fees and running costs, minus your loan repayments. Open the extra boxes to set running costs, buying costs, growth assumptions and your tax rate. Below the results, a year-by-year table shows how the property value, loan balance and your equity could move over the years you plan to hold it.
A worked example. A $700,000 property with a 20% deposit ($140,000), a $560,000 loan at 6.3% over 30 years and rent of $600 a week.
Rent collected over a year (allowing two vacant weeks) is $30,000. After a 7% management fee ($2,100) and $7,300 of running costs, you have $20,600 left. The loan costs about $3,466 a month, or roughly $41,600 a year, so the property runs at about -$21,000 a year, or -$404 a week. You'd need to top that up from your own income.
Gross and net rental yield
Rental yield tells you how hard a property's rent works relative to its price. It's useful for comparing properties quickly, because it ignores the loan.
In the example above, annual rent is $31,200 (52 weeks × $600) on a $700,000 property, which is a gross yield of 4.46%. After vacancy, the manager and running costs, the net yield falls to 2.94%. Net yield is the more honest number, because gross yield flatters a property by ignoring the bills that come with it. A higher yield isn't automatically better, either. Properties with strong rent often have slower capital growth, and the reverse can be true.
Cash flow, negative gearing and tax
A property is negatively geared when its costs, including loan interest, are more than the rent it earns. It's positively geared when the rent covers everything. In Australia, a rental loss can generally be offset against your other taxable income, which reduces your tax bill. That's the "benefit" in negative gearing, but it's easy to overstate. You still pay out more than you collect, and the tax saving only covers a portion of the loss, based on your tax rate.
Example. On our $700,000 property, the interest in year 1 is about $35,094. The taxable result is the net rent of $20,600 less that interest, a loss of roughly $14,500. At a 32.5% tax rate, that loss could cut your tax by around $4,700. Your cash flow improves from -$20,995 to about -$16,300 a year, which is still a weekly cost of around $313.
Enter your tax rate under "Growth & tax assumptions" to see a rough version of this for your own numbers. The calculator also lets you add a yearly depreciation deduction. Depreciation rules for investors have changed over the years, particularly for second-hand properties, so get a schedule from a quantity surveyor and confirm what you can claim with your accountant. The estimate here is a guide only and can't replace tax advice.
Principal and interest vs interest-only
With principal and interest, each repayment reduces the loan, so your equity builds from both repayments and growth. With interest-only, you pay just the interest, so the repayment is lower and the cash flow looks better, but the loan balance doesn't fall. Interest-only periods are usually limited, often to a few years, after which repayments rise because you have a shorter time to pay off the same debt.
On the example loan, interest-only costs about $2,940 a month instead of $3,466, which lifts the weekly cash flow from -$404 to about -$282. The difference is real money in the short term. Switch the calculator between the two to compare for yourself, and remember that the interest-only view assumes the loan stays at the same size for your whole holding period.
What if rates rise?
The result is very sensitive to the interest rate, so test it. Raising the example loan rate from 6.3% to 7.3% lifts the monthly repayment from about $3,466 to $3,839, and the weekly shortfall grows from $404 to around $490. Lenders do the same thing when they assess your borrowing power, by testing whether you could still afford the loan at a rate a few percentage points above the actual one. A good habit is to make sure you could carry the property at a rate well above today's, and during a vacancy as well.
What rent would make it pay for itself?
Try changing the weekly rent. In the example, lifting the rent from $600 to $900 a week lifts the gross yield to 6.69% and narrows the weekly shortfall to about $135. Most properties don't reach that rent, which is why a lot of investors rely on capital growth rather than cash flow. Use the calculator to find the rent at which your own numbers break even, and ask yourself whether that's realistic for the area.
Capital growth and your equity
Most of the long-term return on a property comes from the price going up, not the rent. At 4% growth a year, the example $700,000 property would be worth about $1,036,000 after ten years. With principal and interest repayments, the loan would fall to about $472,000, leaving roughly $564,000 in equity. But over those ten years the property would have cost you about $180,000 in cumulative cash flow shortfalls (rent grows 3% a year in this example, which narrows the gap over time). After allowing for the $143,000 you put in upfront, the total gain is around $241,000, or about 169% of the cash invested.
That's before selling costs, which can include agent fees, marketing and legal costs, and before capital gains tax. Individuals who hold an asset for more than 12 months can generally get a CGT discount, but the rules can change, so check the current position with your accountant. Growth isn't guaranteed either. Prices can stall or fall, and you'd still have the loan to pay. Treat the growth rate as an assumption, and test a low one.
Costs people forget to include
The running costs box covers the usual suspects, but a few catch investors out. Land tax varies by state and territory and depends on the value of your land holdings, so check your own state revenue office. Strata or body corporate fees apply to units and townhouses. Letting fees, tenant advertising and re-letting costs come up between tenants. Maintenance is rarely smooth: a hot water system, a roof repair or a dishwasher can arrive in one year and cost thousands. A common approach is to set aside a percentage of the property value each year, rather than hoping for a quiet one.
Buying costs and the deposit
Stamp duty is usually the biggest upfront cost, and it differs between states and territories, depending on the price and your circumstances. Use your state or territory revenue office's calculator and type the result into the stamp duty box, so the "cash needed upfront" figure is realistic. On top of that you'll pay for legals or conveyancing, building and pest inspections and lender fees. If your deposit is under 20%, lenders mortgage insurance usually applies, and the calculator estimates it and adds it to the loan. Investors sometimes use equity in another property for the deposit, which changes the numbers, so run it by a broker.
If you'd like to see the home loan side in detail, try our mortgage calculator. To see how a regular saving habit could build a deposit, try the compound interest calculator.
Frequently asked questions
How do I work out the cash flow on an investment property?
Take the rent you collect after vacancy, subtract the property manager's fee and running costs such as rates, water, insurance and maintenance, then subtract your loan repayments. A negative number means you top it up from your own pocket.
What is a good rental yield in Australia?
It varies a lot between cities, regions and property types, so there's no single answer. Compare the yield with similar properties nearby, and look at the net yield as well as the gross figure.
Is negative gearing worth it?
Not by itself. The tax saving only offsets part of the loss, so you're still out of pocket each week. It works when the capital growth over the years is bigger than the cost of carrying the property, which isn't guaranteed.
Should I choose principal and interest or interest-only on an investment loan?
Interest-only improves short-term cash flow but doesn't reduce the debt, and the repayment rises when the interest-only period ends. Principal and interest builds equity through repayments. A broker can explain the tax and lender differences for your situation.
How much deposit do I need for an investment property?
Many lenders want at least 10% to 20%, plus money for stamp duty and other costs. A deposit under 20% usually means lenders mortgage insurance, which the calculator estimates and adds to the loan.
Does the calculator include stamp duty, land tax and capital gains tax?
You can enter stamp duty and other yearly costs such as land tax yourself, because they vary by state. Selling costs and capital gains tax aren't included, so the gain shown is before those.
How should I test the numbers?
Try a higher interest rate, a lower rent, a few vacant weeks more than you expect and a low growth rate. If the property still works for your budget in the tougher scenarios, it's on firmer ground.
How accurate are the results?
They're estimates based on steady rates, rent and growth. Real life changes every year, and lenders, councils and tax rules differ, so confirm the details with your broker, accountant or adviser.
This calculator provides general information only and isn't financial, credit, tax, legal or property investment advice. It doesn't consider your personal circumstances, and the results are estimates, not predictions or guarantees. Tax, negative gearing and depreciation are simplified. Speak with a licensed finance broker, accountant and financial adviser before buying an investment property, and check all costs with your lender and your state or territory revenue office.
More tools: investment calculator and interest calculator.