Real Estate ROI Calculator
Calculate your total return on investment and annualized return for a real estate property including rental income and expenses.
Return on investment (ROI) for property measures how much profit you make relative to your costs. It is the fundamental metric for comparing buy-to-let properties and deciding whether a rental investment makes financial sense.
Basic ROI formula: ROI = (Annual profit / Total investment) × 100%
Gross rental yield (simpler, used for quick comparisons): Gross yield = (Annual rent / Property value) × 100%
Net rental yield (more realistic): Net yield = ((Annual rent − Annual costs) / Total investment) × 100%
What to include in costs:
- Letting agent fees (8–12% of rent if managed)
- Annual maintenance allowance (1% of property value is a standard estimate)
- Insurance (buildings + landlord liability)
- Mortgage interest (if leveraged)
- Council tax if property is empty between tenancies
- Void periods (budget for 1–2 months/year without a tenant)
- Annual gas safety certificate, electrical inspection
Worked example: Property value: £200,000 Annual rent: £12,000 (£1,000/month) Annual costs: £3,200 (agent 10%, maintenance, insurance) Cash invested (20% deposit + fees): £45,000
Gross yield = £12,000 / £200,000 = 6% Net yield = (£12,000 − £3,200) / £45,000 = 19.6% (leveraged return)
Capital appreciation: Property that rises 3% per year on £200,000 = £6,000 capital gain. Total return = £8,800 net income + £6,000 capital gain = £14,800 on £45,000 invested = 32.9% total return.
Good yields by UK region (2024):
- North of England / Scotland: 6–9% gross
- Midlands: 5–7%
- London: 3–4% gross (capital growth compensates)