Here are three copies of the same spreadsheet under different scenarios. A property worth $65,000 is being considered, with a loan being taken out to cover the non-cash components at 8% interest-only.
The first scenario is a typical positively geared one - a large enough deposit is being taken out to return a positive return from year 1, given a rental stream of $100 / wk. The second scenario is a typical negatively geared one - a 10% deposit is used, and as a result the initial returns are negative, and are tax-deductable, for a few years until the property "turns positive". The last scenario is similar to the previous two, except the rental stream is $125 / wk while the capital growth is correspondingly lower, and gives much better returns that either of the other scenarios.
The original Excel spreadsheet can be downloaded here.
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| Positive | |||||||||||
| House price | $65,000 | Yield | 8.00% | ||||||||
| Rent per week | $100 | ||||||||||
| Interest rate | 8% | ||||||||||
| House appreciation (on CPI) | 3% | ||||||||||
| Rent appreciation (on CPI) | 2% | ||||||||||
| Risk-free investing (on CPI) | 2% | ||||||||||
| Management fee | 6% | ||||||||||
| Repair costs | 4% | ||||||||||
| # weeks vacany / yr | 2 | ||||||||||
| Deposit | $9,000 | ||||||||||
| Marg. Tax Rate | 43% | ||||||||||
| IO Loan payments | $4,480 | ||||||||||
| Year | House value | Annual rent | Costs | Profit/Loss | Invested Profits | 20yr return | $46,749.74 | ROI | 519.44% | ||
| 1 | $65,000.00 | $5,000.00 | $4,980.00 | $20.00 | $20.00 | 25yr return | $58,530.81 | ROI | 650.34% | ||
| 2 | $66,950.00 | $5,100.00 | $4,990.00 | $110.00 | $130.40 | ||||||
| 3 | $68,958.50 | $5,202.00 | $5,000.20 | $201.80 | $334.81 | ||||||
| 4 | $71,027.26 | $5,306.04 | $5,010.60 | $295.44 | $636.94 | ||||||
| 5 | $73,158.07 | $5,412.16 | $5,021.22 | $390.94 | $1,040.62 | ||||||
| 6 | $75,352.81 | $5,520.40 | $5,032.04 | $488.36 | $1,549.80 | ||||||
| 7 | $77,613.40 | $5,630.81 | $5,043.08 | $587.73 | $2,168.53 | ||||||
| 8 | $79,941.80 | $5,743.43 | $5,054.34 | $689.09 | $2,900.98 | ||||||
| 9 | $82,340.06 | $5,858.30 | $5,065.83 | $792.47 | $3,751.47 | ||||||
| 10 | $84,810.26 | $5,975.46 | $5,077.55 | $897.92 | $4,724.42 | ||||||
| 11 | $87,354.56 | $6,094.97 | $5,089.50 | $1,005.47 | $5,824.38 | ||||||
| 12 | $89,975.20 | $6,216.87 | $5,101.69 | $1,115.18 | $7,056.05 | ||||||
| 13 | $92,674.46 | $6,341.21 | $5,114.12 | $1,227.09 | $8,424.26 | ||||||
| 14 | $95,454.69 | $6,468.03 | $5,126.80 | $1,341.23 | $9,933.97 | ||||||
| 15 | $98,318.33 | $6,597.39 | $5,139.74 | $1,457.65 | $11,590.31 | ||||||
| 16 | $101,267.88 | $6,729.34 | $5,152.93 | $1,576.41 | $13,398.52 | ||||||
| 17 | $104,305.92 | $6,863.93 | $5,166.39 | $1,697.54 | $15,364.03 | ||||||
| 18 | $107,435.10 | $7,001.21 | $5,180.12 | $1,821.09 | $17,492.40 | ||||||
| 19 | $110,658.15 | $7,141.23 | $5,194.12 | $1,947.11 | $19,789.35 | ||||||
| 20 | $113,977.89 | $7,284.06 | $5,208.41 | $2,075.65 | $22,260.79 | ||||||
| 21 | $101,267.88 | $6,729.34 | $5,152.93 | $1,576.41 | $24,282.41 | ||||||
| 22 | $104,305.92 | $6,863.93 | $5,166.39 | $1,697.54 | $26,465.60 | ||||||
| 23 | $107,435.10 | $7,001.21 | $5,180.12 | $1,821.09 | $28,815.99 | ||||||
| 24 | $110,658.15 | $7,141.23 | $5,194.12 | $1,947.11 | $31,339.42 | ||||||
| 25 | $113,977.89 | $7,284.06 | $5,208.41 | $2,075.65 | $34,041.86 |
| Negative | |||||||||||
| House price | $65,000 | Yield | 8.00% | ||||||||
| Rent per week | $100 | ||||||||||
| Interest rate | 8% | ||||||||||
| House appreciation (on CPI) | 3% | ||||||||||
| Rent appreciation (on CPI) | 2% | ||||||||||
| Risk-free investing (on CPI) | 2% | ||||||||||
| Management fee | 6% | ||||||||||
| Repair costs | 4% | ||||||||||
| # weeks vacany / yr | 2 | ||||||||||
| Deposit | $6,500 | Saved $2500 here | |||||||||
| Marg. Tax Rate | 43% | ||||||||||
| IO Loan payments | $4,680 | Lost $4000 here | |||||||||
| Year | House value | Annual rent | Costs | Profit/Loss | Invested Profits | 20yr return | $42,058.29 | ROI | 647.05% | ||
| 1 | $65,000.00 | $5,000.00 | $5,180.00 | -$102.60 | -$102.60 | 25yr return | $52,310.27 | ROI | 804.77% | ||
| 2 | $66,950.00 | $5,100.00 | $5,190.00 | -$51.30 | -$155.95 | ||||||
| 3 | $68,958.50 | $5,202.00 | $5,200.20 | $1.80 | -$157.27 | ||||||
| 4 | $71,027.26 | $5,306.04 | $5,210.60 | $95.44 | -$64.98 | ||||||
| 5 | $73,158.07 | $5,412.16 | $5,221.22 | $190.94 | $124.66 | ||||||
| 6 | $75,352.81 | $5,520.40 | $5,232.04 | $288.36 | $415.52 | ||||||
| 7 | $77,613.40 | $5,630.81 | $5,243.08 | $387.73 | $811.56 | ||||||
| 8 | $79,941.80 | $5,743.43 | $5,254.34 | $489.09 | $1,316.88 | ||||||
| 9 | $82,340.06 | $5,858.30 | $5,265.83 | $592.47 | $1,935.68 | ||||||
| 10 | $84,810.26 | $5,975.46 | $5,277.55 | $697.92 | $2,672.31 | ||||||
| 11 | $87,354.56 | $6,094.97 | $5,289.50 | $805.47 | $3,531.24 | ||||||
| 12 | $89,975.20 | $6,216.87 | $5,301.69 | $915.18 | $4,517.04 | ||||||
| 13 | $92,674.46 | $6,341.21 | $5,314.12 | $1,027.09 | $5,634.47 | ||||||
| 14 | $95,454.69 | $6,468.03 | $5,326.80 | $1,141.23 | $6,888.39 | ||||||
| 15 | $98,318.33 | $6,597.39 | $5,339.74 | $1,257.65 | $8,283.82 | ||||||
| 16 | $101,267.88 | $6,729.34 | $5,352.93 | $1,376.41 | $9,825.90 | ||||||
| 17 | $104,305.92 | $6,863.93 | $5,366.39 | $1,497.54 | $11,519.95 | ||||||
| 18 | $107,435.10 | $7,001.21 | $5,380.12 | $1,621.09 | $13,371.44 | ||||||
| 19 | $110,658.15 | $7,141.23 | $5,394.12 | $1,747.11 | $15,385.98 | ||||||
| 20 | $113,977.89 | $7,284.06 | $5,408.41 | $1,875.65 | $17,569.35 | ||||||
| 21 | $101,267.88 | $6,729.34 | $5,352.93 | $1,376.41 | $19,297.14 | ||||||
| 22 | $104,305.92 | $6,863.93 | $5,366.39 | $1,497.54 | $21,180.62 | ||||||
| 23 | $107,435.10 | $7,001.21 | $5,380.12 | $1,621.09 | $23,225.32 | ||||||
| 24 | $110,658.15 | $7,141.23 | $5,394.12 | $1,747.11 | $25,436.93 | ||||||
| 25 | $113,977.89 | $7,284.06 | $5,408.41 | $1,875.65 | $27,821.32 |
| Good Deal | |||||||||||
| House price | $65,000 | Yield | 10.00% | Increased 2% here | |||||||
| Rent per week | $125 | ||||||||||
| Interest rate | 8% | ||||||||||
| House appreciation (on CPI) | 1% | Reduced 2% here | |||||||||
| Rent appreciation (on CPI) | 2% | ||||||||||
| Risk-free investing (on CPI) | 2% | ||||||||||
| Management fee | 6% | ||||||||||
| Repair costs | 4% | ||||||||||
| # weeks vacany / yr | 2 | ||||||||||
| Deposit | $9,000 | ||||||||||
| Marg. Tax Rate | 43% | ||||||||||
| IO Loan payments | $4,480 | Gained $20,000 here | |||||||||
| Year | House value | Annual rent | Costs | Profit/Loss | Invested Profits | 20yr return | $61,802.58 | ROI | 686.70% | ||
| 1 | $65,000.00 | $6,250.00 | $5,105.00 | $1,145.00 | $1,145.00 | 25yr return | $85,189.80 | ROI | 946.55% | ||
| 2 | $65,650.00 | $6,375.00 | $5,117.50 | $1,257.50 | $2,425.40 | ||||||
| 3 | $66,306.50 | $6,502.50 | $5,130.25 | $1,372.25 | $3,846.16 | ||||||
| 4 | $66,969.57 | $6,632.55 | $5,143.26 | $1,489.30 | $5,412.38 | ||||||
| 5 | $67,639.26 | $6,765.20 | $5,156.52 | $1,608.68 | $7,129.30 | ||||||
| 6 | $68,315.65 | $6,900.51 | $5,170.05 | $1,730.45 | $9,002.35 | ||||||
| 7 | $68,998.81 | $7,038.52 | $5,183.85 | $1,854.66 | $11,037.06 | ||||||
| 8 | $69,688.80 | $7,179.29 | $5,197.93 | $1,981.36 | $13,239.15 | ||||||
| 9 | $70,385.69 | $7,322.87 | $5,212.29 | $2,110.58 | $15,614.52 | ||||||
| 10 | $71,089.54 | $7,469.33 | $5,226.93 | $2,242.40 | $18,169.21 | ||||||
| 11 | $71,800.44 | $7,618.72 | $5,241.87 | $2,376.84 | $20,909.43 | ||||||
| 12 | $72,518.44 | $7,771.09 | $5,257.11 | $2,513.98 | $23,841.60 | ||||||
| 13 | $73,243.63 | $7,926.51 | $5,272.65 | $2,653.86 | $26,972.30 | ||||||
| 14 | $73,976.06 | $8,085.04 | $5,288.50 | $2,796.54 | $30,308.28 | ||||||
| 15 | $74,715.82 | $8,246.74 | $5,304.67 | $2,942.07 | $33,856.51 | ||||||
| 16 | $75,462.98 | $8,411.68 | $5,321.17 | $3,090.51 | $37,624.15 | ||||||
| 17 | $76,217.61 | $8,579.91 | $5,337.99 | $3,241.92 | $41,618.56 | ||||||
| 18 | $76,979.79 | $8,751.51 | $5,355.15 | $3,396.36 | $45,847.28 | ||||||
| 19 | $77,749.59 | $8,926.54 | $5,372.65 | $3,553.89 | $50,318.12 | ||||||
| 20 | $78,527.08 | $9,105.07 | $5,390.51 | $3,714.56 | $55,039.04 | ||||||
| 21 | $75,462.98 | $8,411.68 | $5,321.17 | $3,090.51 | $59,230.33 | ||||||
| 22 | $76,217.61 | $8,579.91 | $5,337.99 | $3,241.92 | $63,656.86 | ||||||
| 23 | $76,979.79 | $8,751.51 | $5,355.15 | $3,396.36 | $68,326.35 | ||||||
| 24 | $77,749.59 | $8,926.54 | $5,372.65 | $3,553.89 | $73,246.76 | ||||||
| 25 | $78,527.08 | $9,105.07 | $5,390.51 | $3,714.56 | $78,426.26 |