Calculator
Rental Property ROI Calculator
Rental Property ROI Calculator
Total Return on Cash Invested
47.2%
ROI Analysis
This property returns about 3.9% a year on your cash across the 10-year hold — $86,399.56 in total profit on $183,000 invested. That trails a plain diversified share fund's long-run average without tenants, levies or land tax, so the deal only makes sense if you believe this specific location will out-grow the market or you value the leveraged bricks themselves. Note it needs $20,726.04 a year from your wages to survive, which also drags the true return lower.
*Projects a full holding period using flat rent and flat expenses (no growth on either), amortised principal-and-interest debt, configurable selling costs (defaulting to 2.5% agent/conveyancing/marketing) and one growth rate applied to value. Excludes income tax, negative gearing effects, land tax and LMI. Educational only, not investment advice.
What Did the Property Actually Do to Your Money?
Most Australian property investors can recite what they paid, roughly what it is worth today, and vaguely how the rent tracks against the loan. Very few can state their true return on invested cash — because unlike shares, property returns arrive in four separate streams that rarely get reconciled: rent left over after costs, the loan balance quietly shrinking each year, capital growth compounding underneath, minus the upfront toll of stamp duty and the exit costs of selling. A property bought with a $150,000 deposit that 'went up' might have returned three percent a year once everything is counted; another returning no cash flow at all can outperform it dramatically through paydown alone. This calculator is the end-of-story version of deal analysis. Where screening tools like our Rental Property Calculator judge a property before you buy, this one judges the whole journey: enter your actual cash in — deposit plus duty and legal costs — the loan, the rent, running expenses, a growth assumption and your intended holding period. The result is the single number every other investment gets measured by: total profit divided by cash invested, expressed both as a lump-sum ROI and an annualised percentage you can put directly beside an index fund's long-run average. If the answer disappoints, better to learn it here than at the tenth anniversary of a deal that never worked.
Four Streams, One Verdict
The model starts from your cash position: initial capital equals the deposit plus purchase costs such as transfer duty and conveyancing — money that must be recovered before any profit is real. Debt service uses the standard amortisation formula across your chosen term, and the schedule splits each year's payments into interest and principal so the paydown stream can be credited separately. Rental income is weekly rent converted honestly to annual terms ($620/week is $32,240/year) less operating expenses, held flat across the hold — deliberately conservative, since expense inflation historically chases rent increases. At exit, the property compounds at your appreciation rate for the holding period, selling costs (agent commission, marketing, conveyancing — defaulting around two and a half percent in Australia) come off, and the remaining loan balance is paid out. Total profit combines four streams: accumulated after-cost rent, principal repaid, net capital gain after selling costs — minus your initial cash. Dividing by that cash gives total ROI; raising one plus ROI to the power of one-over-years gives the annualised figure, which is the only fair comparison against shares because it respects time. A property doubling your money in eight years beats one doubling in twenty-two, even though 'it doubled' sounds identical.
Expert Insights
Stamp Duty Is a Return Tax You Pay Up Front
On many Australian purchases, transfer duty plus legal and inspection costs consume four to five percent of the price before you own a single brick. That money must be earned back before your ROI turns positive, and it is why flipping horizons under about five years so often fail while decade holds succeed. Always enter purchase costs explicitly here — investors who treat duty as part of 'the deposit' systematically overstate returns by blending recoverable equity with unrecoverable transaction friction.
Paydown Is the Boring Stream That Saves Mediocre Deals
Growth gets the headlines but principal repayment is guaranteed, visible and compounding: on a thirty-year loan, early years retire surprisingly little principal, yet by year fifteen the paydown stream frequently exceeds the property's annual cash flow several times over. This is precisely why long holds rescue deals that look ordinary in year three — the tenant effectively buys the property for you at an accelerating pace. Run the same inputs at ten versus twenty years here and watch the annualised figure respond; patience is not just a virtue, it is a return stream.
Judge Against Shares, Not Against Your Purchase Price
The honest benchmark for any property ROI is what the same cash earns in a low-cost diversified portfolio — call it seven to nine percent nominal over long periods, achieved with zero tenants and instant liquidity. An annualised property return below six percent needs a story beyond the numbers: specific local growth drivers, development potential, or income you genuinely value. Above nine percent, verify your assumptions twice — usually the appreciation input is doing heroic work. The calculator's stress-test habit matters: drop growth two points and see whether the deal still stands.
Actionable Tips
- 1
Count Every Dollar of Entry Cost
Before running the numbers, assemble your true cash-in: deposit, transfer duty for your state, conveyancing, building and pest inspections, mortgage registration, and any lender application fees. For most Australian buyers this lands between four and six percent of the purchase price on top of the deposit. Enter it all — the difference between flattering and honest inputs is routinely the difference between a projected win and an actual loss.
- 2
Run Three Growth Scenarios Before Believing One
Set appreciation at your optimistic case, then re-run at two points lower and at zero. If the deal only works at the optimistic setting, it is not an investment — it is a hope with a mortgage. Australian capital-city dwellings have averaged roughly three to five percent nominal growth over very long periods with deep regional and temporal variation, so a plan requiring six-plus percent forever deserves scepticism proportional to its ambition.
- 3
Match the Hold to the Loan's Age
Experiment with the holding-period slider and notice where the annualised return inflects upward — usually between years eight and fifteen as principal paydown accelerates and selling costs amortise away. Selling before that point sacrifices the deal's engine; holding decades past it leaves you with an ageing asset whose maintenance grows faster than rent. Plan your exit window when buying, and revisit it annually rather than letting inertia choose for you.
Real-World Examples
Dana Discovered Her 'Winner' Earned Four Percent
Dana bought a Melbourne townhouse for $680,000 in a hot market and sold eleven years later for $1,010,000 — friends called it a triumph. Running the full ledger told a quieter story: $34,000 of duty and costs going in, agent's commission coming out, a decade of rates, levies and maintenance, and a loan whose early years barely dented principal. Total profit on her $172,000 cash: about $88,000 including retained rent. Annualised, roughly four percent — respectable, but half what her colleague earned leaving the same money in index funds. She kept the next property, but chose it differently.
Owen's Flat-Yield Farm Paid Through Paydown
Owen bought a $430,000 regional house yielding almost exactly his borrowing cost — zero cash flow either way, nothing exciting in growth country at two percent. But he held twenty years. The amortisation schedule retired nearly $300,000 of principal, growth added modestly, and after selling costs his $118,000 cash had compounded at close to seven percent annually — squarely competitive with shares, achieved with none of his wages subsidising the asset. His summary: boring inputs, disciplined hold, honest maths.
The Reyes Family Stress-Tested Their Way Out of a Mistake
Poised to bid on a $900,000 Sydney house, the Reyes ran their scenario here at their hoped-for four percent growth: fine. At two percent — closer to the suburb's decade reality — the annualised return fell below three percent, worse than the term deposits they were leaving. At flat growth it was negative. They walked, redirected the deposit into ETFs while continuing to rent, and bought eighteen months later in a softer market where the same calculator showed the deal surviving even pessimistic settings. The tool did not tell them not to buy; it told them the price was wrong.
Glossary of Terms
- Total Return on Cash Invested
- All profit from a property venture — net rent collected, principal repaid and capital gain after selling costs — divided by the actual cash you contributed. The complete answer to 'how did my money do?'
- Annualised Return
- The constant yearly rate that would reproduce your total return over the holding period. It makes different investments and different timeframes directly comparable, which raw multiples hide.
- Amortisation
- The fixed schedule by which regular loan payments retire debt, with interest dominating early repayments and principal accelerating later. Property returns inherit this shape: paydown starts slow and finishes fast.
Frequently Asked Questions
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Ivy Sinclair-Wren
Financial Chaos Analyst
Ivy Sinclair-Wren is a Financial Chaos Analyst covering investing, AI, wealth psychology, and the emotional consequences of opening finance apps during market crashes. Based in Melbourne, she specializes in demystifying the Australian tax code and helping users navigate the intersection of spreadsheet logic and human irrationality.