Why use this calculator
Investing in property is one of the largest financial commitments you can make. This calculator helps you evaluate whether a rental property will generate positive cash flow or require ongoing subsidization. By calculating yield, mortgage costs, and net cash flow, you can make informed decisions about whether a property investment stacks up financially.
How to use it
Enter the property purchase price, your down payment, expected interest rate, anticipated weekly rent, and estimated annual expenses (including council rates, insurance, maintenance, and management fees). The calculator provides gross and net yield, monthly mortgage payments, and cash flow analysis.
The formula
Gross Yield = (Weekly Rent x 52) / Purchase Price x 100. Net Yield = (Annual Rent - Expenses) / Purchase Price x 100. Monthly Cash Flow = Monthly Rent - Monthly Mortgage - Monthly Expenses. Mortgage uses standard amortization over 30 years.
Worked examples
$450,000 property with $90,000 down, $550/week rent, $8,000 annual expenses
Gross yield of 6.35%, net yield of 4.58%, monthly cash flow varies based on interest rate
$350,000 property with 20% down at 5.5%, renting for $400/week
Positive cash flow scenario with strong gross yield above 5.9%
When people use it
- Evaluating potential investment properties before purchase
- Comparing rental yields across different suburbs or cities
- Determining if a property will be positively or negatively geared
- Planning a property investment portfolio
Tips
- A gross yield above 5% is generally considered acceptable for residential property
- Always budget for vacancies - assume 2-4 weeks of lost rent per year
- Include all expenses: rates, insurance, management fees, maintenance, and body corporate
- Negative cash flow may still be a good investment if capital growth is strong
Questions people ask
- What is a good rental yield?
- Gross yields of 4-6% are typical for residential property in major cities. Regional areas may offer higher yields but with potentially lower capital growth. Net yields above 3% after all expenses are generally considered good.
- What expenses should I include?
- Include council rates, water rates, landlord insurance, property management fees (typically 7-10% of rent), maintenance and repairs, body corporate fees (if applicable), and an allowance for vacancy periods.
- How does negative gearing work with investment properties?
- If your property expenses (including mortgage interest) exceed rental income, you have a net rental loss. In Australia, this loss can be offset against your other taxable income, reducing your overall tax liability.