Rental Property Tool
Analyse rental property purchases with mortgage financing, vacancy, recurring expenses, and growth assumptions. Compare first-year cash flow and profitability, explore annual equity projections, estimate sale proceeds and investment returns, and export results for further review.
| Year | Income | Costs | NOI | Debt | Cash flow | Equity |
|---|
Illustrative, pre-income-tax estimates. Costs include reserves. Sale proceeds exclude capital gains tax; IRR assumes a sale at the end of the selected period. Annual cash flows use monthly loan amortisation.
Table of Contents
Highlights
- Mortgage, deposit and purchase-cost modelling
- Rental income, vacancy and expense forecasting
- Cash flow, cap rate and cash-on-cash metrics
- Interactive cash flow and property equity charts
- Annual projections with CSV, JSON and PNG exports
How Rental Property Tool Works?
The analysis begins with the purchase price, deposit percentage, mortgage rate and term, closing costs, renovation costs and projection period. The starting loan is the purchase price less the deposit, while the initial cash invested includes the deposit, closing costs and renovation budget.
For an amortising mortgage, the monthly payment is calculated using the monthly interest rate and the total number of monthly instalments. With a zero interest rate, the principal is simply divided by the number of instalments.
Here, L is the loan amount, r is the annual mortgage rate divided by 1,200, and n is the loan term in years multiplied by 12. The model calculates each month's interest and principal, then totals the actual payments for each projection year.
Expected annual collected income equals twelve months of rent and other monthly income, adjusted for annual rent growth and the vacancy percentage. Operating expenses combine annual fixed costs (taxes, insurance, HOA or body corporate charges, owner-paid utilities and other expenses), grown annually, with management, maintenance and capital-expenditure reserves calculated as percentages of collected income.
Net operating income (NOI) excludes debt service. Annual cash flow deducts mortgage payments, including principal and interest. The table and charts track collected income, expenses, NOI, mortgage payments, cash flow, outstanding loan balance, property value and owner equity over the selected holding period.
| Metric | Calculation |
|---|---|
| Gross rental yield | Annual scheduled rent plus other income ÷ purchase price × 100 |
| Capitalisation rate | First-year NOI ÷ purchase price × 100 |
| Cash-on-cash return | First-year cash flow ÷ initial cash invested × 100 |
| Debt-service coverage ratio | First-year NOI ÷ first-year mortgage payments |
| Price-to-rent ratio | Purchase price ÷ annual scheduled income |
| Owner equity | Projected property value − remaining loan balance |
| Total profit | Cumulative operating cash flow + net sale proceeds − initial cash invested |
| ROI | Total profit ÷ initial cash invested × 100 |
Projected property value grows by the annual appreciation assumption. Net sale proceeds at the end of the holding period equal projected value after percentage selling costs, less outstanding mortgage principal. The annual internal rate of return (IRR) is the discount rate that makes the present value of the initial cash outlay, yearly cash flows and final net sale proceeds equal zero.
The break-even occupancy estimate compares first-year fixed expenses plus mortgage payments against full scheduled gross income after the selected variable expense percentages. It is an estimate rather than a forecast of occupancy.
Practical Use Cases
First-time landlords: Compare a property's rental income with taxes, insurance, maintenance allowances and monthly mortgage payments to see whether it could produce positive cash flow.
Buy-to-let investors: Compare different purchase prices, deposit sizes and mortgage rates using cash-on-cash return, capitalisation rate and debt-service coverage.
Portfolio owners: Assess how vacancies, management charges, repairs and rent increases may influence operating returns before adding another rental property.
Property renovators: Include upfront renovation expenses and projected appreciation to assess the effect of improvement costs on total profit and holding-period returns.
Long-term investors: Explore different holding periods and assumed appreciation rates, then examine projected loan balances, property equity and final sale proceeds.
Property managers: Examine the sensitivity of cash flow to vacancy, annual expenses and rent growth to support budget discussions with owners.
Accuracy and Limitations
Results follow the entered assumptions, using monthly mortgage amortisation and annual projections for up to 50 years. Rent growth applies equally to rent and other income, and the vacancy allowance is constant; variable expenses are percentages of collected income. Tax, insurance and other fixed expenses grow at one shared rate. The model assumes a constant mortgage rate, no refinancing or extra repayments, and smooth annual appreciation. It does not separately model income tax, depreciation, inflation-adjusted returns, capital gains tax, lease-up timing or unexpected major repairs beyond the selected reserves. Sale costs are a percentage of the projected sale price. IRR may be unavailable for some cash-flow patterns, and displayed figures are rounded.
