Investment Property Cashflow Calculator

Cashflow calculator

Investment Property Cashflow Calculator

The Sound Property Cashflow Calculator is a user-friendly tool for residential property investors, designed to give a quick estimate of the net operating income in the first year of ownership. The Property Cashflow Calculator combines the rental revenue and operating expenses of the property, with the percentage of income tax paid, to measure the net change in the investor’s weekly and annual income.

“If you fail to plan, you are planning to fail”
– Benjamin Franklin

Understanding the property cashflow, or the relationship between the income and expenses of an investment property, is extremely important. It can make be the difference between a solid long-term investment and a costly mistake. An investor should have a good indication how the property impacts their overall position and be comfortable that the investment fits their financial capabilities and budget. Cashflow can be affected by a variety of factors such as interest rates, rental return, running costs and deposit amounts.

A user will be able to determine if the investment is negatively geared, positively geared or positive cashflow before tax concessions. Negatively geared means the investor must put money in each year to cover the difference between the total cost of the property (interest repayments, rates, insurance, maintenance, etc.) and the total income (rent and tax concessions). Positively geared means that after tax concessions, and a tax rebate, the property is in a positive cashflow position. Positive cashflow property refers to the rental income exceeding all expenses without any tax concessions or rebate.


SOUND TIP : Most property investors improve their short-term cash flow by applying to the Australian Tax Office (ATO) through their accountant for a tax variation. This gives them their tax breaks in each wage packet, instead of waiting to the end of the year for a tax refund. Learn more about the ATO Variations here.

Cashflow Calculator – Instructional Video from Sound Property Group.

Help Notes

Capital Expenses:

The initial purchase costs contributed by the purchaser. These costs can be paid using ‘Cash’ or ‘Equity’ from another property. If equity is chosen, the Property Cashflow Calculator will apply an interest rate to these borrowed funds in the calculation.

Purchase Price:

The agreed price that will be on the Contract of Sale.

Pre-purchase Costs:

Costs associated with due diligence or preliminary research on the investment. Other pre-purchase costs may include soil tests or consulting.

Purchase Costs:

Initial costs associated with the purchase. The ‘Deposit’ may be expressed as a dollar amount or a percentage of the purchase price (e.g 10%). Other purchase costs may include a buyer’s agency fee or travel for inspections.

Loan Establishment Costs:

Initial costs associated with the establishment of a mortgage. ‘Lender’s Mortgage Insurance’ (LMI) is a once off fee that may be payable by the borrower if the loan is greater than 80% of the value of the property. It may be paid with cash, equity or capitalised, which refers to adding it to the main loan. Other loan establishments costs may include bank fees and charges relating to the setup of the mortgage.

Annual Income and Expenses:

Yearly income (rent) and expenses incurred owning the property.

Rental Income:

Rental Income is all money received from a tenant by the landlord. It can be expressed as a ‘Weekly’ (PW) or ‘Annual’ (PY) dollar amount or a percentage of the purchase price, ‘Rental Yield’.

Annual Expenses:

Typical per year (PY) running costs incurred in property ownership. This is by no means a definitive list, but the core items that need to be considered in cashflow calculations.

Loan Interest:

Interest calculations charged on the loan. The loan can be set as ‘Interest Only’ or ‘Principal and Interest’ if the borrower intends on paying the loan down over time. This section also adds the interest charge on any ‘equity funds’ used in the purchase costs.

Tax and Market Factors:

An investment property can be subject to various tax concessions such as ‘Depreciation’. Any net losses may also reduce an investors taxable income and make them eligible for a tax rebate based on their ‘Tax Bracket’. Please consult your tax specialist for further information.


Depreciation refers to the reduction in the value of an asset over time, particularly due to wear and tear. This estimate is just a guide based on a few simple parameters. It is calculated using the ‘Diminishing Value’ rather than ‘Prime Cost’ method. Please refer to your tax specialist for the method best suited to your situation.

Tax Bracket:

Purchaser or buying entities marginal tax rate. Note that a Medicare Levy of 2% is also payable by most taxpayers on top of this. This does not take any other factors which can influence the amount of tax paid, such as HECS contributions, any rebates, deductions or levies into account. Please consult your tax specialist for further information.


Property Cashflow Estimates:

These calculations show the relationship between the ‘Rental Income’ and ‘Expenses’, with and without tax implications. Please be aware that there are many factors that can influence your overall tax position and it is therefore highly recommended to seek advice from a qualified accountant or finance professional before making any investment decisions.

Pre-tax Property Cashflow:

Pre-tax cashflow refers to the surplus or deficit of funds when expenses are subtracted from rental income. This figure is before any tax implications or concessions.

Post-tax Property Cashflow:

Post-tax cashflow incorporates purchaser tax concessions such as depreciation and other ‘on-paper’ losses to create a net taxable position for the investment. Depending on the ‘Tax Bracket’ of the purchaser, they may be entitled to a tax rebate for these losses which, when added to the pre-tax position, creates a final post-tax cashflow. Please note: This software only looks at this investment in isolation from all other assets and it is therefore highly recommended to seek advice from a qualified accountant or finance professional before making any investment decisions.

Equity Growth:

Enter a projected ‘Capital Growth’ rate and see the value of the investment in 10 years’ time and the subsequent equity created. The loan amount will diminish if the ‘Loan Type’ is set on ‘Principal and Interest’ or stay the same if ‘Interest Only’.


Glossary Terms:

Many definitions of the terms used in the Property Cashflow Calculator can be found here on our Glossary pages. Further help can be obtained by hovering over the ? on each screen. Alternatively, please Contact Us should you need assistance or have questions.

  • Property Address – The address of the property
  • State – The state of the property you are buying in
  • Pre-purchase costs – Costs associated with due diligence or preliminary research on the investment
  • Purchase Price – The amount the property costs
  • Rates – Refers to the rates a local council will charge a landlord to raise revenue so they can provide services and infrastructure to the local area
  • Building Insurance – An insurance policy that covers your home as well as other structures on your property such as garages, sheds, fences and in-ground pools
  • Body Corporate – Annual contributions from a landlord. These are formed by the owners of a piece of land that is subdivided into flats, units or apartments in order to manage and maintain the common areas everyone uses, such as stairwells, the car park, or pool
  • Letting fee – A fee that a property manager will charge a landlord to find a secure a tenant for the property
  • Landlords insurance – Insurance policy taken out by a landlord to cover tenant related issues such as rental arrears and property damage
  • Property Management Fee – Ongoing fee charged by a property manager which is a percentage of the annual rental income
  • Loan amount – The amount being borrowing from the bank
  • Loan to Value amount – Your Loan to Value Ratio (LVR) is calculated by dividing the loan amount by the value of the property, then multiply by 100 to get a percentage. Banks and financial institutions use this as a measure of whether you can afford the loan.
  • Interest rate– The payment made by a borrower to a lender in return for the loan of money, in addition to the principal repayments.
  • Annual interest – Amount payable on the loan from the bank
  • Purchase price – The price paid for the property
  • Standard of finish – Level of finish, refers to standard of quality of fixtures and fittings
  • Property type – House, unit, apartment, townhouse etc
  • Construction year – Year the property was first built
  • Tax rebate – Refund from the ATO that is reflective of your marginal tax rate
  • Capital growth – is the increase in value of your property over time
  • LMI – Lenders Mortgage Insurance. A one off fee the bank will charge a purchaser should the deposit be lower than 20%
  • Rental Income – Rent payable from a tenant to a landlord
  • Depreciation – a reduction in the value of an asset over time, due in particular to wear and tear


DISCLAIMER: Sound Property Group accepts no responsibility for the accuracy of data entered into the Property Cashflow Calculator, and its subsequent estimates. Results are not financial advice and are a general guide only. Always consult a qualified and licensed accountant or financial professional before making any decisions to invest. Please refer to the full disclaimer before using Sound Property Cashflow Calculator.

This article is provided for general information only and does not constitute personal advice, as it does not take into consideration your personal circumstances. Please consult a licensed tax or financial advisor before making any decision to invest.