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Investment Property Calculator


 




Investment Property Calculator





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     The Investment Property Calculator is an investment tool to plan and calculate all cost and return aspects and "What if Scenarios" on a potential Investment property. Use the Investment Property Calculator to select the right property and repayment schedule to suit your circumstances. Project investment growth, rent yields, cash flow and depreciation. Runs in Microsoft Excel but you may also manually use the formulas and calculations on paper.

 

 

Investment Property

  • Profit is made from an Investment Property with either a Positive Cashflow or a Capital Gain.
  • When an investment is Negatively Geared it  means outgoing costs exceed incoming money. In many cases this will attract tax benefits. 

Capital Gain

If you want to achieve high capital gains, location is all important. Aim to buy in an area that is on the edge of becoming popular: an influx of population, growth in services, high occupancy rates and the presence of well known retail stores are all good indicators that an area is up-and-coming.

Look around the neighbourhood. Talk to real estate agents, residents and especially property valuers. Local knowledge can be very useful - it's next to impossible to find a suburb's hottest street by researching on the internet, but a quick chat with the local greengrocer may yield the kind of insider information you need.

The inner areas of capital cities are traditionally the best bet for solid capital growth, which has made off-the-plan apartments a particularly hot investment choice in recent years. However, the markets in some capital cities have become overheated after a sustained boom, and property prices are unlikely to grow significantly again for at least a couple of years.

In all likelihood, your costs (interest, repairs, rates, fees, depreciation) will outstrip income generated by rent, but this will hopefully be offset by a much larger gain in value and the tax benefits of negative gearing.

Positive Cashflow

When the money you are generating from rent outstrips the amount you are spending on interest, repairs and other property costs you are generating a positive cashflow.

The big benefit of positive cashflow is a steady, instant source of income. You have instant access to your profits, whereas with a negatively geared capital gains investment you need to wait years for value to accrue. This means you can put your money towards the things you want right now.

Properties located outside major metropolitan centres are more likely to generate positive cashflow returns than those inside cities. In particular, regional centres with Universities provide an endless supply of students who need temporary accommodation.

Property that is initially negatively geared can eventually generate positive cashflow if the investor holds onto it for a long enough period. Rents will always rise to keep up with the market and as time goes on your principle will slowly be cut down, reducing your interest payments. Gradually, your property might begin to generate cashflow positive.

 


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