Break-Even Rent Calculator

Break-even rent is the minimum weekly rent your property needs to earn to cover every holding cost, leaving you with zero cash flow. Not a profit, not a loss. Just even.

It is the simplest and most useful benchmark for any investment property. If your actual rent is above the break-even figure, you are cash-flow positive before tax. If it is below, you are paying out of your own pocket to hold the property each month.

The calculation itself is not complicated. You add up all your annual holding costs (mortgage repayments, rates, insurance, maintenance, and everything else), then divide by 52 to get a weekly figure. That weekly figure is your break-even rent.

Where it gets genuinely useful is in comparison. Knowing your break-even rent lets you compare it against what the local rental market will actually pay. If comparable properties in your suburb rent for $550 a week and your break-even figure is $620, you know the property will cost you money from day one. That is not necessarily a reason not to buy, but it is information you need before making the decision.

Break-even rent is also valuable for existing landlords. If you bought your property five years ago and rates have risen since then, your break-even figure has shifted. Recalculating it regularly, especially after rate changes or when insurance and rates notices arrive, keeps you honest about where each property actually stands. For a broader look at all the costs that go into this calculation, see our guide to the cost of owning a rental property in Australia.

Your break-even rent is only as accurate as the holding costs you include. Miss a category and you will underestimate the rent you need, giving yourself a false sense of security. Here is what to include:

• Mortgage repayments. This is the biggest line item for most landlords. Include the full repayment amount, whether you are on principal and interest (P&I) or interest-only (IO). If you are on an IO loan, your break-even rent will be lower since you are not repaying principal. But remember that IO periods end, and when they do, your repayments jump.
• Council rates. Billed quarterly in most councils, typically $1,200 to $2,500 per year for a suburban property.
• Water rates. The fixed service charges from the water authority, usually $800 to $1,200 per year. Usage charges passed on to tenants do not count here.
• Strata or body corporate levies. If your property is a unit or apartment, these cover building insurance, common area maintenance, and building management. They can range from $3,000 to $8,000 or more per year.
• Building and landlord insurance. Standalone houses need both building insurance ($1,500 to $3,000) and landlord insurance ($1,000 to $2,000). Units in a strata scheme have building cover included in the levies, but you still need landlord insurance. For details on what policies cover, see our landlord insurance guide.
• Property management fees. If you use a property manager, include the ongoing management fee (typically 7 to 12% of rent) plus letting fees. If you self-manage, this is zero, but factor in the value of your time.
• Maintenance allowance. Budget 1 to 2% of the property's value per year. Costs do not arrive evenly, but over time this estimate holds up.
• Land tax. Depending on your state and total land holdings, you may owe land tax. Include it if it applies to you.

Add these up for the full year, divide by 52, and you have your weekly break-even rent.

Break-even rent turns a vague feeling about your property's performance into a hard number. That number is useful in three specific situations.

Before you buy. When you are evaluating a potential investment property, calculating break-even rent tells you the minimum the property needs to earn to wash its face. Compare that to actual rents in the suburb and you immediately know whether the property will be cash-flow positive, roughly neutral, or clearly negative. This is a far better starting point than guessing or relying on a real estate agent's rental estimate.

When reviewing rent. If you already own the property and are deciding whether to increase rent, knowing your break-even figure gives you context. An increase from $520 to $550 might seem modest, but if your break-even rent is $510, that $30 increase is the difference between barely scraping by and having a meaningful buffer. Our guide on setting the right rent price covers how to research market rates for your suburb.

After costs change. Interest rate rises, insurance premium increases, a jump in council rates, or a new strata special levy all push your break-even rent higher. Recalculating after any significant cost change shows you whether your current rent still covers the position or whether the gap has widened.

The calculation deliberately excludes tax benefits like depreciation and negative gearing offsets. This is intentional. Break-even rent measures cash flow, not tax outcomes. You want to know whether the property pays for itself from its rental income alone, before any tax adjustments. The tax benefits are real, but they arrive once a year at tax time. The mortgage payment arrives every month.

Here is a worked example for a typical investment property purchase. Say you are looking at a $650,000 house in a Brisbane suburb. You have a 20% deposit ($130,000) and are borrowing $520,000 at 6.50% on a principal and interest loan over 25 years.

Your annual holding costs:

• Mortgage repayments: $3,505/month = $42,060/year
• Council rates: $1,900/year
• Water rates: $1,050/year
• Building insurance: $2,200/year
• Landlord insurance: $1,350/year
• Maintenance allowance (1.5%): $9,750/year
• Land tax (QLD, if applicable): $0 (under threshold for this example)

Total annual holding costs: $58,310

Divide by 52 weeks: $1,121 per week.

That is your break-even rent. The property needs to bring in $1,121 per week just to cover its costs with no surplus.

Now check the market. If comparable houses in that suburb rent for $650 to $700 per week, you are looking at a shortfall of roughly $420 to $470 per week, or around $22,000 to $24,500 per year. That is a significant negatively geared position.

If you switch to an interest-only loan for the first five years, the mortgage cost drops to approximately $33,800 per year, bringing total holding costs to about $50,050 and the break-even rent down to around $963 per week. Still above typical rents for the area, but a noticeably smaller gap. The trade-off is that you are not paying down any principal during that period.

Use the calculator above to run the numbers for your own property. Adjust the loan amount, rate, and holding costs to match your actual situation.

If your actual rent is below your break-even figure, your property is costing you more to hold than it earns. In property investment terms, you are negatively geared.

This is not automatically a problem. Most Australian investment properties with a mortgage are negatively geared in the early years of ownership, when interest costs are highest and rent has not yet had time to grow. The tax system recognises this by allowing you to offset the rental loss against your other income, reducing the tax you pay on your salary or business income.

For example, if your break-even rent is $950 per week and your actual rent is $620 per week, you have a shortfall of $330 per week, or roughly $17,160 per year. Add in non-cash deductions like depreciation (which could add $5,000 to $10,000 depending on the property's age and fit-out), and the total deductible loss might be $22,000 to $27,000. At a 37% marginal tax rate, that saves you $8,000 to $10,000 in tax. The after-tax cost of holding the property drops to roughly $7,000 to $9,000 per year.

The question is whether that after-tax cost is something you can comfortably absorb, and whether you believe the property's long-term capital growth will justify it. A $9,000 annual after-tax cost over ten years is $90,000 in cash you have spent. The property needs to appreciate by at least that much, after capital gains tax, for the investment to break even overall.

When it becomes a warning sign: If the gap between your actual rent and break-even rent is large and growing (because rates keep rising or holding costs keep increasing while rents stay flat), the numbers may stop making sense even with the tax benefit. A property that costs you $15,000 a year after tax requires very strong capital growth to justify itself. Run the numbers honestly, including realistic growth assumptions, before committing to hold through a deep negative position.

propkt tracks your rental income against expenses for each property, so you can see at a glance whether the gap is narrowing or widening over time. That visibility is the difference between an informed hold and an expensive guess.