Buy-to-Let Property Calculator
Use this calculator to estimate the potential profitability and cash flow of a buy-to-let property investment. Input your property details, rental income, and associated costs to get an overview of key financial metrics.
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function calculateBuyToLet() {
var purchasePrice = parseFloat(document.getElementById('purchasePrice').value);
var monthlyRent = parseFloat(document.getElementById('monthlyRent').value);
var depositAmount = parseFloat(document.getElementById('depositAmount').value);
var managementFees = parseFloat(document.getElementById('managementFees').value);
var maintenanceRepairs = parseFloat(document.getElementById('maintenanceRepairs').value);
var voidPeriod = parseFloat(document.getElementById('voidPeriod').value);
var otherAnnualCosts = parseFloat(document.getElementById('otherAnnualCosts').value);
var mortgageTerm = parseFloat(document.getElementById('mortgageTerm').value);
var mortgageAnnualRate = parseFloat(document.getElementById('mortgageAnnualRate').value);
// Input validation
if (isNaN(purchasePrice) || purchasePrice <= 0 ||
isNaN(monthlyRent) || monthlyRent < 0 ||
isNaN(depositAmount) || depositAmount < 0 ||
isNaN(managementFees) || managementFees 100 ||
isNaN(maintenanceRepairs) || maintenanceRepairs 100 ||
isNaN(voidPeriod) || voidPeriod 52 ||
isNaN(otherAnnualCosts) || otherAnnualCosts < 0 ||
isNaN(mortgageTerm) || mortgageTerm <= 0 ||
isNaN(mortgageAnnualRate) || mortgageAnnualRate purchasePrice) {
document.getElementById('buyToLetResult').innerHTML = 'Deposit amount cannot be greater than the purchase price.';
return;
}
// 1. Gross Annual Rental Income
var totalAnnualRentalIncome = monthlyRent * 12;
// 2. Gross Rental Yield
var grossRentalYield = (totalAnnualRentalIncome / purchasePrice) * 100;
// 3. Annual Operating Costs
var annualManagementFees = (managementFees / 100) * totalAnnualRentalIncome;
var annualMaintenanceRepairs = (maintenanceRepairs / 100) * totalAnnualRentalIncome;
var annualVoidCost = (voidPeriod / 4) * monthlyRent; // Assuming 4 weeks per month for simplicity
var totalAnnualOperatingCosts = annualManagementFees + annualMaintenanceRepairs + annualVoidCost + otherAnnualCosts;
// 4. Net Annual Rental Income (before mortgage)
var netAnnualRentalIncomeBeforeMortgage = totalAnnualRentalIncome – totalAnnualOperatingCosts;
// 5. Net Rental Yield (before mortgage)
var netRentalYieldBeforeMortgage = (netAnnualRentalIncomeBeforeMortgage / purchasePrice) * 100;
// Mortgage Calculations
var mortgageAmount = purchasePrice – depositAmount;
var monthlyMortgageRate = (mortgageAnnualRate / 100) / 12;
var numberOfPayments = mortgageTerm * 12;
var monthlyMortgagePayment = 0;
if (mortgageAmount > 0 && monthlyMortgageRate > 0) {
monthlyMortgagePayment = mortgageAmount * (monthlyMortgageRate * Math.pow(1 + monthlyMortgageRate, numberOfPayments)) / (Math.pow(1 + monthlyMortgageRate, numberOfPayments) – 1);
} else if (mortgageAmount > 0 && monthlyMortgageRate === 0) {
// If rate is 0, it's just principal repayment
monthlyMortgagePayment = mortgageAmount / numberOfPayments;
}
var annualMortgagePayment = monthlyMortgagePayment * 12;
// 6. Net Annual Cash Flow (after mortgage)
var netAnnualCashFlowAfterMortgage = netAnnualRentalIncomeBeforeMortgage – annualMortgagePayment;
// 7. Cash on Cash Return
var cashOnCashReturn = 0;
if (depositAmount > 0) {
cashOnCashReturn = (netAnnualCashFlowAfterMortgage / depositAmount) * 100;
} else if (mortgageAmount === 0) { // If no mortgage, and no deposit, it means 100% cash purchase
cashOnCashReturn = (netAnnualCashFlowAfterMortgage / purchasePrice) * 100; // ROI on full cash purchase
}
var resultHtml = '
Buy-to-var Investment Summary
';
resultHtml += 'Gross Annual Rental Income:
£' + totalAnnualRentalIncome.toFixed(2) + '';
resultHtml += 'Gross Rental Yield:
' + grossRentalYield.toFixed(2) + '%';
resultHtml += 'Total Annual Operating Costs:
£' + totalAnnualOperatingCosts.toFixed(2) + '';
resultHtml += 'Net Annual Rental Income (before mortgage):
£' + netAnnualRentalIncomeBeforeMortgage.toFixed(2) + '';
resultHtml += 'Net Rental Yield (before mortgage):
' + netRentalYieldBeforeMortgage.toFixed(2) + '%';
if (mortgageAmount > 0) {
resultHtml += 'Monthly Mortgage Payment:
£' + monthlyMortgagePayment.toFixed(2) + '';
resultHtml += 'Annual Mortgage Payment:
£' + annualMortgagePayment.toFixed(2) + '';
} else {
resultHtml += 'Monthly Mortgage Payment:
£0.00 (No Mortgage)';
resultHtml += 'Annual Mortgage Payment:
£0.00 (No Mortgage)';
}
var cashFlowClass = netAnnualCashFlowAfterMortgage >= 0 ? 'positive-value' : 'negative-value';
resultHtml += 'Net Annual Cash Flow (after mortgage):
£' + netAnnualCashFlowAfterMortgage.toFixed(2) + '';
var cashOnCashClass = cashOnCashReturn >= 0 ? 'positive-value' : 'negative-value';
resultHtml += 'Cash on Cash Return:
' + cashOnCashReturn.toFixed(2) + '%';
document.getElementById('buyToLetResult').innerHTML = resultHtml;
}
Understanding Your Buy-to-Let Investment
A buy-to-let property is an investment property purchased with the intention of renting it out to tenants. The goal is to generate rental income and potentially benefit from capital appreciation over time. This calculator helps you evaluate the financial viability of such an investment by considering various income and expenditure factors.
Key Metrics Explained:
- Gross Annual Rental Income: This is the total rent you expect to receive from the property over a year, before any expenses are deducted. It's a straightforward measure of the property's income potential.
- Gross Rental Yield: Calculated as (Gross Annual Rental Income / Property Purchase Price) * 100. This percentage indicates the annual return on the property's value from rent alone, before accounting for any costs. It's a quick way to compare the income-generating potential of different properties.
- Total Annual Operating Costs: These are the recurring expenses associated with owning and managing the property. They typically include property management fees, maintenance and repair allowances, costs due to vacant periods (voids), and other expenses like insurance, ground rent, or service charges.
- Net Annual Rental Income (before mortgage): This is your annual rental income after deducting all operating costs but before considering any mortgage payments. It gives a clearer picture of the property's operational profitability.
- Net Rental Yield (before mortgage): Calculated as (Net Annual Rental Income before mortgage / Property Purchase Price) * 100. This provides a more realistic yield figure than the gross yield, as it accounts for the day-to-day running costs of the property.
- Monthly Mortgage Payment: If you're financing the purchase with a mortgage, this is the fixed monthly amount you'll pay to the lender, covering both principal and the mortgage annual rate.
- Annual Mortgage Payment: The total amount paid towards your mortgage over a year.
- Net Annual Cash Flow (after mortgage): This is the most critical figure for many investors. It represents the actual profit or loss you make from the property each year after all income and expenses, including mortgage payments, have been accounted for. A positive cash flow means the property is generating income, while a negative cash flow indicates it's costing you money each year.
- Cash on Cash Return: Calculated as (Net Annual Cash Flow after mortgage / Deposit Amount) * 100. This metric measures the annual return on the actual cash you've invested (your deposit). It's particularly useful for comparing the performance of different leveraged investments.
Important Considerations:
While this calculator provides valuable insights, remember that it's a projection. Real-world scenarios can vary due to:
- Taxes: Income tax on rental profits, Stamp Duty Land Tax (SDLT) on purchase, and potential Capital Gains Tax (CGT) upon sale are significant factors not included here.
- Unexpected Costs: Major repairs, legal fees, or tenant issues can impact profitability.
- Market Fluctuations: Rental values and property prices can change, affecting both income and capital appreciation.
- Interest Rate Changes: If you have a variable-rate mortgage, your payments could increase.
- Inflation: The purchasing power of your cash flow can be affected by inflation.
Always conduct thorough due diligence and seek professional financial advice before making any investment decisions.