INVESTMENT PROPERTIES - CALCULATE THE RETURN ON CAPITAL
Use this tool to calculate the overall return on capital for a rented, mortgaged residential or commercial property.  This is the equivalent to the IRR (Internal Rate of Return) over the selected period.

    Property purchase price £:

  
Any initial purchase costs £: eg legal, stamp duty, refurbishment
Total outlay £: purchase price plus initial expenses
Gross rent (assumed paid in advanced) £: enter frequency below
Rent frequency pa (eg 4=quarterly):

Estimated % rent lost in voids: % per annum reduction
Estimated annual expenses £: including maintenance
Income after expenses & voids £ 

Initial mortgage loan £:
Nominal mortgage interest rate: % per annum
Mortgage term - 0 if interest-only:
Rests per annum: 12= monthly, 4 = quarterly etc
Gross mortgage payments 
Net income  
Total initial investment  
CALCULATE RETURN AFTER: years  
Estimated property growth rate: % per annum
Property value £:
Less mortgage outstanding £:
Selling costs & redemption fees £: eg legal, agency, lender    
Future value of investment £:  
Capital growth of investment £:
Overall return on capital (RoC): per annum including level income
     RoC assuming no mortgage:

Note: Calculations assume the interest and the rental income is fixed.  In practise, rents rise and mortgage interest can vary.  So calculating returns over a period longer than about 5 years may be underestimating the actual return.

Designed by Michael Kelly for "Mortgages Exposed" 24th Sep 2001, updated 5 Apr 2006