Why this tool exists
Every rental-property calculator on the internet compares one property to another property. None of the mainstream tools take the question "what if I'd invested the same money in the S&P 500?" seriously.
That matters because real estate is a long-term, illiquid, leveraged bet against a liquid, diversified, passive alternative anyone can buy in 30 seconds for $0 commission. If a deal doesn't beat the passive alternative over a 30-year hold with full after-tax math, it isn't a good deal — no matter how pretty the cap rate looks.
This tool makes that comparison explicit.
The 30-year model
We run the deal year-by-year for 30 years. Each year produces a YearResult containing:
- Gross rent, vacancy, and effective gross income (EGI)
- Every operating expense, grown at either the expense-growth rate or the separate property-tax growth rate (default 2%/yr to match CA Prop 13)
- Net operating income (NOI)
- Interest and principal portions of the mortgage payment
- Annual and cumulative cash flow
- Property value (compounded at appreciation rate) and home equity
- Depreciation deduction (27.5-year residential schedule, phased out at year 28 half-year, zero from year 29+)
- Tax savings from depreciation + mortgage interest deduction
- Parallel S&P 500 wealth at 3 rates (conservative / base / bull)
- Year-specific metrics: cap rate, cash-on-cash return
How the S&P 500 comparison works
This is the part the competing tools get wrong or skip entirely.
For the S&P scenario, we compound both:
- Your original down payment, at the S&P rate, for 30 years
- Every year's negative cash flow, added at the year it occurs. If your rental loses $5K in year 3, that's $5K you could have invested in the S&P instead — so we add it to the S&P balance in year 3, and it compounds from there.
That second part is critical. Cash flow negativity isn't free just because the property "pays it off later" — it has its own 27-year opportunity cost that most calculators ignore.
At exit, we apply long-term capital gains tax to the S&P gains (treating dividends as reinvested and taxed only at exit — a simplification that favors the S&P side somewhat).
After-tax exit math
When the property is sold, we apply:
- Selling costs at your supplied % (6% default, covers broker commission + title/escrow + transfer taxes)
- Mortgage payoff at end-of-exit-year balance
- Section 1250 depreciation recapture at 25% (federal cap; does not include state recapture where applicable)
- Long-term capital gains tax on the remaining appreciation at your supplied rate (20% default federal; high earners should use 23.8% for the NIIT surcharge + their state rate on top)
What you actually walk away with at exit = net sale proceeds + cumulative cash flow (can be negative!) + cumulative tax savings. That's the "Total Walk-Away" column in the Exit-Year Explorer.
The 4-bucket attribution
Most investors don't realize how much of their rental return actually depends on appreciation vs the other sources. We decompose total wealth-above-down-payment into:
- Appreciation — property value rising
- Principal paydown — tenants paying down your loan
- Cumulative cash flow — often negative in early years, positive after rent growth catches up
- Cumulative tax savings — depreciation + mortgage-interest deduction
The four sum exactly to (total RE wealth − down payment) at exit. An "appreciation dependency" of 75%+ means 3 out of every 4 dollars you're projected to earn depends on the property going up in value. If you don't believe the appreciation assumption, the deal dies.
Simplifications we make (and defend)
- No passive-activity-loss phase-out above $150K AGI. High earners in reality can't fully deduct rental losses against W-2 income; they stack up until sale. We assume full deductibility. This favors the rental side slightly. A real CPA conversation is non-negotiable before you close.
- Flat tax rates for the 30-year hold. Marginal rates change over your career; we hold constant.
- Dividends on the S&P side are taxed only at exit. In reality dividends (~1.5%/yr) are taxed annually. This favors the S&P side.
- No refinance during hold. Rate stays as entered for 30 years. In practice many investors refinance multiple times.
- No state-specific cap-gains differences. You enter one cap-gains rate covering federal + your state.
How we validate the math
The calculation engine is reconciled against a professional-grade Excel model (built by a licensed California real estate consultant and used in client work) across 28 independent benchmark checks at years 1, 5, 10, 20, and 30:
- Year-1 EGI, NOI, cash flow, interest portion, tax savings, cap rate
- Full-year depreciation number, DSCR at Y1 and Y10
- Y5 NOI, cash flow, cumulative tax savings
- Y10 EGI, NOI, cash flow, RE wealth, S&P base wealth, cumulative tax savings
- Y20 cash flow
- Y30 EGI, NOI, cash flow, property value, RE wealth, S&P base wealth, cumulative tax savings
- Break-even Y1 rent
Every one of the 28 matches the Excel model within a few dollars (the largest allowed tolerance is $200; most are under $10). You can see the full test suite at scripts/verify.ts in the repo.
Privacy
No accounts. No email. No analytics tracking user inputs. Your deal data lives in your browser's URL and localStorage only. When you click Share, the URL encodes every input — that URL is the only place your deal is persisted outside your own machine. If that makes you uncomfortable, don't click Share.
The disclaimer
This tool is educational. It is not investment advice, tax advice, legal advice, or real estate advice. Before committing capital to any property, engage a licensed real estate broker, a CPA, and a real estate attorney in your state. Projections assume the inputs you provide; real outcomes depend on variables nobody can model.