Real Estate vs Stock Market Calculator

The two investment paths are calculated completely independently and only combined at the end for comparison. Real estate total return ($) depends only on Home appreciation (%/yr), Gross rental yield (%), Years held, and Investment amount ($) -- Stock market return (%/yr) exclusively drives Stock market total return ($), the separate figure it's being compared against.

This calculator assumes a heavily leveraged purchase (5x, with a 20% down payment and an 80% mortgage at an assumed 6.5% rate), and Net annual rental income ($) subtracts property tax, insurance, maintenance, and interest-only mortgage payments from gross rental income. At typical Gross rental yield (%) assumptions, that combined cost load frequently exceeds rental income even before considering appreciation -- a negative figure reflects that financing cost structure, not a calculation error.

No -- Investment amount ($) scales both Real estate total return ($) and Stock market total return ($) by the same multiple, but that multiple takes its sign from your other assumptions, not from Investment amount ($) itself. If Home appreciation (%/yr) or Stock market return (%/yr) is negative enough (especially combined with real estate's 5x leverage and financing costs, or a long Years held on the stock side), a larger Investment amount ($) produces a larger LOSS, not a larger gain. It never changes which asset wins the comparison, only how large the win or loss is on both sides.

This calculator models a 20% down payment on a property valued at five times that amount (an 80% mortgage covers the rest), so home appreciation applies to the entire leveraged property value, not just your cash invested. A given appreciation percentage therefore generates a proportionally larger dollar gain on the leveraged real estate side than the same percentage return would on an unleveraged stock position of the same cash investment -- the flip side is that leverage cuts the same way on losses.

Not necessarily -- a longer holding period compounds whichever growth rate you assumed for each side, so it amplifies the gap in whatever direction your entered Home appreciation (%/yr), Gross rental yield (%), and Stock market return (%/yr) assumptions already point. If your assumed real estate appreciation is negative, for instance, a longer holding period makes the leveraged real estate position worse, not better, so check which direction your specific assumptions imply before assuming more years always helps the current leader.