Before you inspect an investment property, a few quick numbers can tell you whether it is worth your time. What will it cost upfront? Will the rent cover the repayments? How much will you need to put in each week? Working that out usually means a messy spreadsheet and a lot of guessing about stamp duty, unless you have a good property investment calculator.
We built HomeROI, a free Australian property investment calculator, to make those first numbers quick. This guide covers what it calculates, how to use it and, just as importantly, what it doesn’t cover.
What HomeROI calculates
Enter a listing’s price, rent and costs, and HomeROI works out:
- Upfront costs, including stamp duty for each state and territory, legal and inspection costs, transfer fees and lenders mortgage insurance (LMI) if your deposit is under 20%.
- Loan repayments for principal and interest or interest-only loans, with a stress test at a higher interest rate.
- Holding costs such as council and water rates, strata, landlord insurance, management fees and maintenance.
- Weekly and yearly cash flow, gross and net yield, and the rent you would need to break even.
- Projections over 5, 10 or 30 years, based on the growth rates you choose.
An advanced view adds tax estimates such as the effect of negative gearing, loan-to-value ratio, rent cover and a simple deal score.
How to use it
- Start with the guided setup if you’re not sure where to begin. Answer a few plain-English questions and it fills in the calculator for you.
- Enter the listing: state, property type, price and whether you are a first home buyer or foreign purchaser.
- Set your finance: deposit, interest rate, loan term and repayment type.
- Enter the expected rent and vacancy. Check comparable listings in the suburb rather than relying on the agent’s estimate alone.
- Adjust holding costs and growth assumptions, then review the results.
Every field has a hint with a typical range, and everything recalculates instantly. Nothing you enter is uploaded or stored. Try HomeROI, our free property investment calculator.
A few numbers worth understanding
- Gross yield is the yearly rent divided by the price. It looks good on paper but ignores costs.
- Net yield takes holding costs into account, and is usually noticeably lower.
- Cash flow shows whether the rent covers repayments and costs, or how much you need to top up.
- LVR is your loan as a percentage of the property value. Above 80%, LMI usually applies.
Test your assumptions
Results depend heavily on the interest rate, vacancy and growth rate you enter. Try a more cautious scenario too: a higher interest rate, a few more weeks of vacancy and lower growth. If the property only works in the best case, that is worth knowing before you make an offer.
What it doesn’t cover
HomeROI gives estimates only. It doesn’t include land tax, capital gains tax on sale, lender fees or your full personal tax position. Stamp duty is modelled on published state schedules, which change regularly. Depreciation needs a quantity surveyor’s schedule. It is not financial, tax or legal advice. Confirm every figure with a qualified financial adviser, accountant, mortgage broker or conveyancer before making a decision.
Why a marketing agency built a property calculator
We build small tools to solve problems we run into, then give them away. It is also a good example of what a well-built web tool can do for a business, whether that’s a quote calculator, booking tool or product configurator. See why your website gets visitors but no enquiries.
Want a custom tool for your business?
Madexify designs and builds websites and custom web tools for businesses across Pakenham, Officer, Beaconsfield, Berwick, Narre Warren, Cranbourne, Clyde and Bunyip, from calculators to booking and quote forms. See our web design and development services, or contact us to talk about your idea.
This article is general information only. It is not financial, tax or legal advice.
