The 5 Metrics That Matter
Property investing is a numbers game. Here are the five financial metrics every investor should know — and how to calculate them.
1. Gross Rental Yield
The simplest measure of rental return.
Formula: (Annual Rent ÷ Purchase Price) × 100
Example: £15,600 annual rent ÷ £250,000 price = 6.24% gross yield
This is your headline number. It's useful for quick comparisons between properties, but it doesn't account for costs.
2. Net Rental Yield
The real-world return after costs.
Formula: ((Annual Rent − Annual Costs) ÷ Purchase Price) × 100
Example: (£15,600 − £4,000 costs) ÷ £250,000 = 4.64% net yield
Annual costs typically include: management fees, insurance, maintenance, ground rent, and service charges.
3. Cash-on-Cash Return
The return on the actual cash you've invested (not the full property price).
Formula: Annual Pre-Tax Cash Flow ÷ Total Cash Invested × 100
Example: £2,400 annual cash flow ÷ £62,500 deposit + costs = 3.84% CoC return
This is your most honest metric. It tells you what your actual money is earning.
4. Return on Investment (ROI)
The total return including property appreciation.
Formula: (Annual Net Profit + Annual Appreciation) ÷ Total Investment × 100
Example: (£2,400 cash flow + £12,500 appreciation) ÷ £62,500 invested = 23.8% ROI
This is why property investing can be so powerful — leverage amplifies your returns.
5. The 50% Rule
A quick rule of thumb for estimating expenses: 50% of rental income goes to costs (excluding mortgage).
Example: £1,300/month rent → £650 operating expenses → £650 for mortgage and profit.
This isn't exact, but it's a useful sanity check during initial screening.
Quick Reference Table
| Metric | Formula | Good Range |
|---|---|---|
| Gross Yield | Annual Rent ÷ Price × 100 | 5%+ |
| Net Yield | (Rent − Costs) ÷ Price × 100 | 4%+ |
| Cash-on-Cash | Cash Flow ÷ Cash Invested × 100 | 8%+ |
| ROI | (Profit + Appreciation) ÷ Investment × 100 | 15%+ |
| 50% Rule | Half of rent = costs | Sanity check |
Don't Calculate These Manually
Every PIE report includes all of these metrics calculated automatically for your target location and budget. Financial projections, yield estimates, and cash flow analysis — all generated in seconds.
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Understanding these metrics is the difference between guessing and investing. Let PIE calculate them all for you automatically.