The property investment calculator is designed to provide people who are considering buying an investment property with an indictive financial planning tool that will allow them to see the expected profitability of the property over a period of 25 years based on their own data input. Any parameters changed will automatically change the results which are clearly displayed for each year over the 25-year cycle.
Instructions for using the Property Investment Assessment Calculation Chart
This chart has been designed to provide people who are considering buying an investment property with a financial planning tool that will allow them to see the expected profitability of the property over a period of 25 years based on their own data input. Any parameter change will automatically change the results which are clearly displayed for each year over the 25 year cycle.
Insert your input data only into the boxes that are coloured green as described below:
- Property purchase price – This is the full purchase price of the property in question.
- Finance required – insert into this box the amount of any loan that you will require to purchase the property. Please note that the figure that appears in the yellow box is the maximum loan that a lender would accept.
- Deposit required – This box calculates automatically.
- Mortgage interest rate – Insert the interest rate that you would expect will be applied to any loan. This rate is then used in the calculator for both interest only mortgage calculations and capital & interest mortgage calculations.
- Mortgage arrangement fee – Insert here the total of any fees that will be charged by your chosen lender.
- Number of existing properties – Recent tax changes, announced by the UK government mean that anyone buying a second property will be charged a higher rate of stamp duty on purchasing a property. To take account of this in the calculator we use a 0 to reflect a first time purchase and a 1 or to indicate that another property is owned. This zero or 1 number tells the calculator to apply the correct stamp duty, applicable in England and Wales.
- Stamp duty – This is automatically calculated.
- Solicitor fees – Insert the total amount that your solicitor will charge including their search fees.
- Refurbishment allowance – If you will need to carry out any refurbishment of the property not included in the mortgage loan, insert the required amount in the box.
- Statutory Fittings – Any buy to let property must be fitted with certain statutory fittings. If these need to be installed, put the expected cost in the box.
- Landlord registration – If you will become a new landlord you will have to register with the local council who will charge a fee for registration.
- Letting Agents charges – If you intend renting the property through a letting agent, put the percentage share of the rent that the letting agent will charge to provide this service. If no letting agent is to be used, put a 0 (Zero) in the box.
- Buildings insurance – If the property isto be rented you will need as a minimum, buildings insurance. Put the annual cost of all insurances into the box.
- Gross monthly rent – This should be the full monthly rent you expect to let the property for prior to any deduction by a letting agent. Note the figure that appears in the yellow box, indicates the minimum amount of rent that a lender will consider acceptable. If you intend taking out a mortgage on the property, you must ensure the property will rent for a higher figure than that shown.
- Annual repairs – All property will require maintenance and you should put here the annual amount you would expect to spend on the property for its fittings, maintenance and repair.
- Continuous occupation factor – with any rented property, it is inevitable that the property will not have a tenant 100% of the time. This allows you to put in the percentage of time on average that you expect to have the property rented out in any given year.
- Property price inflation – put here the annual inflation rate that you expect the property to achieve, based on its location in the country. This figure will vary for different locations.
- Average rent increases – put here the inflation rate that you expect will apply to your annual rent increases.
- UK inflation rate – The UK government publishes inflation rates for the UK. Put the inflation rate in the box that you think will apply.
The ones that are colored yellow are calculated automatically, and require no data input.
Once this data has been inserted, the tables to the right will show how profitable the property will be, excluding tax. Changes to any of the input data will data will change the profitability results. You can make as many changes as you want and look at best and worst scenarios.