Rental ROI calculator
Yield measures the property. This measures your money. With a mortgage involved they give very different answers, and this is the one that tells you whether the deal works.
How this is calculated
Cash invested is the deposit plus buying costs plus any refurbishment. That is the money genuinely out of your pocket, and it is what the return is measured against.
Annual cash flow is rent after a void allowance, less the mortgage cost, less running costs. Return on cash invested is that cash flow divided by the money you put in.
Interest only shows the truer cash-on-cash picture because every pound leaves the account. On a repayment mortgage part of the payment reduces the balance, so the cash return understates what you are building.
Tax is excluded. Since 2020 mortgage interest attracts only a basic rate tax credit rather than full relief, which reduces the real return for higher rate landlords and does not appear in any yield figure.
Rates used · 2026/27
| Cash invested | deposit plus buying costs plus refurb |
| Buy to let deposit | typically 25% |
| Interest cover test | lenders commonly want rent at 125% to 145% of interest |
| Tax | not included |
| Capital growth | not included |
Last checked July 2026. Source: HMRC and gov.uk.
Worked example
A £180,000 property with a £45,000 deposit, £9,000 of buying costs and £3,000 of refurbishment means £57,000 of your own cash. Rent of £950 after an 8% void allowance is £10,488. Interest-only at 5.2% costs £7,020 and running costs take £2,479, leaving £989 a year. That is a 1.7% return on cash, against a 6.3% gross yield.
Common questions
What is the difference between yield and ROI?
Yield measures the property against its price and ignores how you paid for it. ROI measures your cash return on the money you actually put in, so leverage changes it dramatically.
Why does interest only look better?
Because none of the payment goes to capital, so the cash flow is higher. You are not better off, you are simply not building equity, so compare the two on total return rather than cash flow alone.
What return should I be aiming for?
That is your judgement, not ours. Compare it against what the same cash would do elsewhere at similar risk, and remember this excludes tax and capital growth in both directions.
Should I include capital growth?
Not here, deliberately. It is a forecast rather than a figure you can enter honestly, and mixing it in makes a speculative number look like a measured one.