Should I buy a rental property or invest elsewhere spreadsheet
You've got a sum of money and two obvious places to put it. A rental property, or the share market.
Most of the argument you'll read online is tribal. Property people think shares are a casino; share people think landlords are deluded about their actual returns. Neither camp is doing the maths for your situation.
This is one of the most comprehensive calculators on the site, and it does exactly that.
What makes property genuinely different
Two things, and only two.
Leverage. The bank will lend you 65–80% of the purchase price of a house. It will not lend you a cent to buy an index fund. That's the real advantage, and it's why property has built so much wealth in New Zealand. Not because houses are better assets, but because you can control a large one with a small deposit.
It's a forced savings scheme. The mortgage payment arrives whether you feel like saving that month or not. Plenty of people have ended up wealthy through property largely because they couldn't get at the money.
Everything else people say about property being "safer" or "you can see it" is psychology, not finance.
What makes shares genuinely different
No tenants, no maintenance, no 2am phone calls. Property is a business with a time cost that never shows up in the yield calculation.
Diversification. One rental is one house, in one street, in one town, exposed to one local economy. A fund is thousands of companies across dozens of countries.
You can sell part of it. Need $20,000? Sell $20,000 of your fund. You can't sell the back bedroom.
The costs people forget on the property side
Vacancy between tenants — budgeting for 52 weeks of rent is optimistic
Maintenance, which isn't annual but is certain
Rates, insurance, property management
Healthy Homes compliance
Legal, building reports, and the agent's commission when you sell
For the tax side in detail, see the rental property calculator page.
And the honest one on the other side
Comparing property to shares only works if you'd genuinely invest the money. If the alternative to a rental is the deposit sitting in a savings account being slowly eaten by inflation, that's not a fair comparison, and the forced-savings point above may matter more than any return figure.
What the calculator does
Enter what you'd pay for the property, what you'd expect in rent, your assumptions for house price growth, and what you'd expect to earn if you invested the same money instead. It runs both over your timeframe.
Two limitations worth knowing. It doesn't flex your tax rate as your income changes over the years. And you need to enter your non-property returns already net of tax and fees — the calculator can't work those out for you, because they depend on whether you're in a PIE, whether you hold NZ shares with imputation credits, and whether FIF applies.
There isn't a right answer
Both build wealth. Both have made people rich and both have gone badly for people who were over-leveraged, under-diversified or unlucky with timing.
What there is, is a right answer for your situation. Your income, your tolerance for debt, how much of your time you want to spend on it, and what else you're trying to do with your money.
If you'd like to work through that with someone who doesn't sell property or investments, get in touch for a free 30 minute chat.