See what your investment property actually returns on the cash you put in. Year-1 cash-on-cash, total ROI over the hold period, and an annualised return figure you can compare against any other investment — leverage and capital growth included.
Cash-on-cash + IRRHolding costs modelledLeveraged vs cash
01 —INPUTS
Property & Finance
Under 20% usually requires LMI — include in acquisition costs
Stamp duty + conveyancing + inspections + LMI if applicable
Interest-only assumption (principal repayments increase your equity, not your return)
→Total net return: $514,400 − $130,000 − $205,000 = $179,400
→Total ROI: ~87%, annualised ~6.5% p.a.
This shows why capital growth matters so much in AU property: the investor absorbs 10 years of negative cashflow, but leverage amplifies the growth on $800k (not just $205k invested) to produce an acceptable return.
When property ROI beats ETFs
→Strong growth markets — 5%+ capital growth with modest cashflow drag easily beats ETF benchmarks once leveraged.
→Long holds — Transaction costs (stamp duty + selling) are amortised over more years.
→Value-add — Renovations, subdivision, or zoning changes boost ROI beyond raw market growth.
→Tax benefits — Negative gearing and depreciation convert cashflow drag into tax deductions — additional upside not modelled here.
FAQ
What is ROI on an investment property?
Return on Investment (ROI) measures the total return on the cash you actually invested — deposit plus stamp duty and other acquisition costs. It includes both annual cashflow and capital growth at sale, divided by your original cash outlay. This differs from rental yield, which ignores capital growth and leverage.
What is cash-on-cash return?
Cash-on-cash return is annual pre-tax cashflow (rent minus expenses minus loan interest) divided by the cash you invested. It's a first-year snapshot that tells you whether the property pays you now, or needs capital growth to justify the investment. Negative cash-on-cash is common in Australian capital cities and is acceptable if long-term growth is expected.
Why compare leveraged vs unlevered returns?
Leverage magnifies both returns and risk. In a strong capital growth market, a 20% deposit earns capital growth on 100% of the property value, turbo-charging ROI. In a flat or declining market, leverage works the other way. This calculator shows both so you can see what the borrowing actually contributes.
What capital growth rate should I assume?
Australian residential property has averaged around 5–6% per annum over the long term, though individual suburbs vary widely. Be conservative — 3–4% for planning purposes is safer than assuming historical averages continue. CoreLogic and Domain publish suburb-level growth data to sense-check your assumption.
Does this include tax benefits like negative gearing?
No. This is a pre-tax ROI calculator focused on the property's underlying economics. To model negative gearing savings, depreciation deductions, and capital gains tax on sale, use our investment property calculator or negative gearing calculator.
Why interest-only loan assumption?
Interest-only gives a cleaner ROI picture because principal repayments increase your equity but reduce your cashflow — effectively you're moving cash from one pocket to another, not earning a return. Most investors use interest-only loans for exactly this reason. If you're using principal-and-interest, your cashflow will be lower but ending equity higher; net position is similar.
What is a 'good' property ROI in Australia?
Long-term, a diversified ETF portfolio returns around 8–10% p.a. To beat that, a leveraged property investment typically needs 4%+ capital growth plus a manageable cashflow drag. Annualised returns above 10% p.a. over 10+ years are considered strong. Anything under 5% p.a. is underperforming passive investments.
Tax Accuracy & Sources
Reviewed: March 2026 · Tax year: 2025-26
This calculator is pre-tax and uses interest-only loan mechanics. It models compound capital and rent growth based on your assumptions. Actual returns depend on market conditions, individual tax positions, and time-varying loan rates.