8 Basic Real Estate Calculations Every Property Investor MUST Know

There are a total of eight basic real estate calculations an investor need to know before they start investing in properties. These eight calculations is often used when evaluating a potential investment property; whether it’s worthwhile to buy or not.

The main reason why property investment is so lucrative is because of this word called ‘leverage’. By leveraging on bank loans, the amount of upfront cash is lower, hence higher gross return yield. Let’s discuss on these eight investing numbers you must know.

1. Downpayment Requirement

The purchase price of a property is equal to the total amount of mortgage loan and the downpayment. A downpayment for a home is the total upfront cash and CPF a buyer need to fork out when he purchase his property. It is often expressed as a percentage of the purchase price. In Singapore, since the maximum mortgage a buyer can take is 75% of the property price (Loan-to-Value Ratio LTV), the minimum downpayment a buyer have to fork out for a private property is 25%. This rule was implemented in 2013 by then Finance Minister Mr Tharman Shanmugaratnam. This is to prevent a repeat of 2008 Lehman Brothers Financial Crisis in the US.


Mortgage Borrowing Table

1.1 How Do I Calculate Downpayment?

From the table above and the below section, if you intend to take a loan up to age 65, the Loan-to Value (LTV) ratio is maximum 75%, hence the total downpayment is minimum 25% for the first property purchase.

However, if you intend to take a loan that stretches after age 65, and your loan tenure is up to 30 years, then the maximum LTV is 55% which equates to minimum of 45% downpayment.

A longer loan tenure of 31 to 35 years long will means the maximum LTV is also 55% which translate the minimum downpayment is also 45%

If your current existing mortgage loan is not yet paid off and you intend to purchase a second property, you will only be allowed to borrow 45% of the value of the property. Meaning, your downpayment you need to pay the remaining 55% using CPF and/or cash.

Therefore, in order to calculate your total downpayment, we have to figure out the total mortgage loan you can take. And this is based on 3 factors, your age, the number of loan you currently have and the intended loan tenure.

2. Total Upfront Cash Outlay

Aside from the downpayment requirement, there are also other associated costs of owning a property that you cannot afford to ignore. Together, these will form the total upfront cash outlay to buy an investment property in Singapore.

The miscellaneous costs involved are

  • Buyer’s Stamp Duty (BSD)
  • Additional Buyer’s Stamp Duty (ABSD)
  • Conveyancing Fees (Legal Fee)
  • Property Agent’s Commission


Purchase Price or Market Value of Property, whichever is higherBSD Rates
First $180,0001%
Next $180,0002%
Next $640,0003%
Remaining Amount4%

Buyer’s Stamp Duty (BSD) is a tax paid upon exercising of the Option to Purchase (OTP) a resale property or signing the Sale & Purchase Agreement (S&P) for new developments. The BSD is applicable to either the purchase price or the market value, whichever is higher.

For ease of Calculation:

  • For Property < $1m: Property Price X 0.03 – $5400
  • For Property > $1m: Property Price X 0.04 – $15,400


Number of Residential Properties Owned123+
Singapore Citizens0%17%25%
Singapore Permanent Residences5%25%30%

However, in addition to BSD, there are additional tax that has to be paid on top of the BSD. But it is applicable to certain group of buyers and for residential property only; the Additional Buyers Stamp Duty (ABSD). The ABSD was introduced to manage the demand for properties in Singapore and to keep housing affordable for Singaporeans. It was also to discourage foreigners and entities from purchasing residential properties, especially multiple properties.

Just like BSD, the amount of ABSD to be paid is based on the property’s purchase price or market value, whichever is higher.

Therefore, SPRs buying their first residential property will need to pay an ABSD rate of 5% and 25% for their second and subsequent residential property. Foreigners will need to pay an ABSD rate of 30% regardless of the number of residential properties they have bought.

The good news for US nationals or nationals and PRs from Switzerland, Liechtenstein, Norway and Iceland, is that they do not have to pay ABSD due to Singapore’s Free Trade Agreement with these countries.

When multiple buyers of different profiles are jointly purchasing a property, the higher ABSD rate will apply on the purchase price or market value of the property, whichever is higher.

However, for married couples made up of Singaporean & Singapore Permanent Resident or Singaporean & Foreigner buying their matrimonial house, they are eligible to apply for remission of ABSD.

Read more here for more information on tax rates. Also, do see how you can avoid ABSD for Properties in Singapore.

2.3 Conveyance Fees

Conveyancing Fees is made up of several components like mortgage stamping fees, CPF legal fees (if CPF is involved), solvency/bankruptcy searches, purchaser and bank caveat lodgement for transfer and mortgage, legal requisitions, lawyer’s professional fees, etc.

As a general guide, conveyancing fees is usually in the range of S$2,500 to S$4,000 depending on the purchase price, type of property purchased and reputation of the law firm.

2.4 Property Agent’s Commission

Agent’s commission (fee may be subjected to prevailing GST) is payable upon successful completion of the transaction.

For purchase of private resale property, buyers usually do not pay the commission. Instead, the Property Agent that serves the buyer collect their fees from the seller (or seller’s agent). For purchase of property directly from developers, no fees are payable to the Property Agent from the buyer. Do always check with your agent and clarify before engaging the agent.


3. Monthly Mortgage Payment

The monthly mortgage payment includes the cost of repaying the loan, plus interest payable over a fix period of time. It is the monthly payment you pay to the bank to finance your loan.

Bank Loan Calculator
Example of the Mortgage Calculator to find the monthly mortgage payment (top right)

Using our Mortgage Calculator, by keying in your property purchase price, downpayment and loan tenure, you can find out the monthly mortgage payment.


4. Net Rental Income

Net Rental Income, also known as Net Operating Income (NOI) is the total profit due to the revenues from the property, minus all reasonable necessary operating expenses. In in other words, the monthly cashflow of the property.

Gross Rental IncomeOperating Expenses
Potential Rental Income$42,000
1-Month Vacancy Period


Effective Rental Income$38,500
Property Tax (non-owner)($4,440)
Furnish & Upkeep (~1 month)


Condo Maintenance Fees (~$380)


Insurance (~$2)


Property Agent's Commission


Total Expenses


Net Rental Income$23,520

Example of calculation of Net Rental Income


5. Gross Rental Yield

Gross Rental Yield is the rent a property can provide over a year, expressed as a percentage of its purchase price.

This is what a landlord can expect as return on his investment before taxes, maintenance fees, rental vacancies and other costs.

Investors use their gross rental yield to evaluate the income they profit from their investments (without taking expenses into account) as it is basically and often used to compare properties with different values and rental returns.

A high rental yield equates to a greater cashflow.

Gross Rental Yield = (Gross Rental Income in 1 year / Purchase Price) X 100

Example: Peter and Jane purchase a $1,000,000 condo as an investment. They rent the unit out at a monthly rent of $3,500.

Gross Rental Yield = ($3,500 X 12) / $1,000,000 X 100% = 4.2%

6. Net Rental Yield

Net Rental Yield is also known as Capitalisation Rate or Cap Rate.

In the previous point, Gross Rental Yield does not consider expenses to calculate net rental yield as it is use mainly as a comparison tool of different investment properties.

Some of the expenses that might be missed out includes property tax, furnishing and upkeep, condo maintenance fees, insurance and commission, etc.

Net Rental Yield = (Net Rental income / Purchase Price) X 100

7. Payback Period

Payback period is the amount of time it takes to recover the cost of an investment or how long it takes for an investor to reach breakeven.

The shorter the payback period, the more desirable the investment. The longer the payback period of an investment, the larger the risk. Payback period is easy to calculate and investors can use the payback period to make quick judgements about their investments.

The formula to calculate the payback period of an investment depends on whether the periodic cash inflows from the project are even or uneven.

Payback Period = Purchase Price / Gross Rental income in 1 year

Eg. Payback Period = $1,000,000 / $3,500 X 12 = 23.8 years

For uneven cash flow, calculate the cumulative net cash flow for each period and used the formula below:

Payback Period = A + (B / C),


  • A = the last period number with a negative cumulative cash flow;
  • B = absolute value of cumulative net cash flow at the end of period A; and
  • C = total cash inflow during the period following period A

Cumulative net cash flow is the sum of inflows to date, minus the initial outflow.

8. Cash-on-Cash Return

Cash-on-Cash (CoC) Return measures the amount of net cash flow a property is generating as a percentage of the total amount of cash invested.

CoC return is determined by dividing the annual cash flow of a property by the amount of cash put into the property (generally the downpayment and closing costs) during the same year.

CoC return metric calculates only the return for the current period, typically one year, rather than for the lifetime of the investment.

Cash-on-Cash Return are generally used by investors to look for properties where cash flow is paramount.

CoC Return = (Annual Net Cash Flow / Total Cash Invested) X 100

Eg, Peter and Jane Purchased a $1,000,000 condo with a downpayment of $250,000. The net expenses is around $147,000. The property is rented out at $3,500 per month.

Annual Net Cash Inflow: $3,500 X 12 = $23,520

Total Cash Invested: $147,000 + $250,000 = $397,000

CoC Return: $23,520 / $397,000 = 5.9%

9. BONUS: Safety Net

I’m going to provide you with 2 bonus. Firstly is Safety Net.

Statistically, in an event a Singaporean were to lose his job, he would need a maximum of 6 months to find a new replacement job. Hence a 6 months buffer is important.

Hence to calculate safety net, using the Mortgage Calculator App (point 3). Multiply the amount by 6 to find the total safety net amount. This amount is best kept for rainy days either in cash or in CPF Ordinary account.

9b. BONUS: Safety Net II

For Building Under Construction (BUC) or new projects where the condominium development has not fully been constructed yet, since the payment is progressive, the formula is slightly different.

Calculate the amount needed for each stage (your agent can provide the numbers for you) multiply by the total length of each stage and add them up.

Eg, Foundation $400X9 + Building $900X6 + Misc $1300 X 20

Compare them vs the CPF that you will earn over that period and see if the total outlay over 35 months can be covered or not. If it can be covered then is safe!

10. BONUS: Capital Appreciation (Return of Equity)

Capital Appreciation depends on the market forces and is hard to determine. It can go from 2% to as high as 16% in history. As such, I would usually plan to take the lowest. This is the way to calculate your estimated future profit.

Profit Calculation: You can use 2.5% or 3% (I use both to have 2 scenarios to determine how realistic they are)

  • Profit: 3% X Property Price
  • Return of Equity: Profit / Downpayment X 100%

Eg. $1million profit makes a profit of $100,000 in 5 years. The owner tool a 75% loan and used a total of $250,000 in cash and CPF.

  • Return of Equity: 100,000 / 250,000 X100% = 40% in 5 years OR 8% per year

To add on, $100,000/(5yearsX12months) = $1,666 per year growth 

This is a very realistic and safe figure as an estimation for the capital appreciation of the property.




There are several more different Real estate calculations but the above eight are the most basic that every investors should know. Do check out our guide on the Top 5 Must Use Free Property Tools.

The primary objective of investing in properties is for cash flow and appreciation.

It is often complex to calculate the return of investment on a property and requires a skill in accounting knowledge as there are many other more sophisticated financial metrics used to measure and analyse a good property investment.

Other real estate calculations or formula are Net Present Value (NPV), Debt Service Coverage Ratio (DSCR), Return of Equity (ROE), Internal Rate of Return (IRR), etc. Understand how to use these tools  to evaluate investment can help an investor to obtain a more precise performance of his investment property, to decide if he should continue to hold or sell.

Although these are the technical side, other factors to consider are property location, lease of tenure left in the property, future growth using the URA Masterplan, investment objectives, risk tolerances and profile of current tenants. Hence I come up with my Property P.L.U.S System to gather all these information into 1 package to determine whether a property is a sound real estate for investment.

As real estate is often one of the biggest purchases that you will make in your lifetime, and also comes with a huge mortgage that can result in financial distress if not managed properly, do consult with us on how you can have a safe, low-risk yet good return property.

Happy Investing!

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