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.
Get your free financial analysis →
Understanding these metrics is the difference between guessing and investing. Let PIE calculate them all for you automatically.
About the Author: Nick Thorp is the founder of PIE (Property Intelligence Engine) and Property Aura, with 10 years of experience in property investment research and data analysis. Try PIE free.
Run all five metrics on any US property with our free rental property calculator. For a complete deal analysis framework, see our guide on how to analyze a rental property deal.