Real Estate vs S&P 500 Calculator

Should you put your money into a rental property or an index fund? This calculator models both investments in detail — factoring in leverage, mortgage costs, rental income, appreciation, taxes, maintenance, dividends, and compounding — to show exactly which comes out ahead over your time horizon.

How this calculator works

This calculator models both investments from first principles. For real estate, it builds a full year-by-year amortization schedule, grows rental income annually, deducts vacancy, maintenance, taxes, insurance, and full mortgage payment to calculate true net cash flow. For the S&P 500, it compounds the initial investment at the expected return, calculates dividend income separately (shown as actual dollars, not just reinvested), and applies capital gains tax at exit.

Why leverage changes everything in real estate

When you put $200,000 down on an $800,000 property, you control an $800,000 asset. A 4% appreciation on $800,000 is $32,000 — a 16% return on your $200,000 cash. No stock market investment gives you this kind of leverage at institutional rates. This is why real estate often outperforms on an equity basis in early years even when gross returns look similar.

What the calculator doesn’t include

This model excludes depreciation tax deductions (which favor real estate), 1031 exchanges (which defer capital gains indefinitely), property management costs if you hire a manager (~8-10% of rent), and the significant time cost of being a landlord. On the S&P 500 side, it excludes behavioral drag — historically reducing real investor returns by 1.5-2% annually vs the index.