Gross rental yield is the number most property websites show you. It’s also the least useful figure for making real investment decisions. Professional investors calculate multiple layers of return — gross yield, net yield, cash-on-cash return and total ROI — because each one tells you something different about the deal. Here’s how to calculate all of them correctly.

Gross rental yield

Gross yield is the simplest calculation and the most commonly quoted:

Gross yield = (Annual rent ÷ Purchase price) × 100

Example: A property purchased for £120,000 renting at £750/month (£9,000/year) has a gross yield of 7.5%.

Gross yield is useful for quick comparisons between properties. It tells you nothing about your actual returns after costs.

Net rental yield

Net yield accounts for all the ongoing costs of owning and running the property:

Net yield = ((Annual rent − Annual costs) ÷ Purchase price) × 100

Annual costs to deduct include: letting agent management fees, landlord insurance, maintenance budget, void periods, accountancy, ground rent/service charge, and compliance certificates.

Example using the same property: £9,000 annual rent minus £2,000 costs = £7,000 net income. Net yield = (£7,000 ÷ £120,000) × 100 = 5.8%.

For Northern Ireland, a net yield of 5–7% on a leveraged buy-to-let is strong. Related: What’s a realistic ROI on a buy-to-let in Northern Ireland?

Cash-on-cash return

Cash-on-cash return is the most important metric for leveraged investors — it measures the return on your actual cash deployed, not the total property value:

Cash-on-cash return = (Annual net income ÷ Total cash invested) × 100

Total cash invested includes: deposit + purchase costs (Stamp Duty, legal fees, survey) + refurbishment costs.

Example: Deposit £30,000 + purchase costs £6,000 + refurbishment £8,000 = £44,000 total cash invested. Annual net income £7,000. Cash-on-cash return = 15.9%.

This is why leverage amplifies returns significantly — you’re earning 15.9% on your cash while the gross yield is 7.5%. See: The hidden costs investors forget to budget for.

Total return (including capital growth)

Total return combines rental income with capital appreciation over the holding period:

Total return = Net rental income over holding period + Capital gain on disposal

Northern Ireland has seen consistent capital growth over the past decade. Even conservative assumptions of 3–4% annual capital growth compound meaningfully over 5–10 years and significantly outperform the rental yield figures alone.

Return on investment (ROI)

For a complete picture of a deal, combine all returns:

ROI = (Total net rental income + Capital gain − All costs) ÷ Total cash invested × 100

This is the number that tells you whether the deal was worth doing relative to alternatives — and the number professional investors use to compare deals across different markets.

Common calculation mistakes

• Using purchase price as total cash invested — you need to include all acquisition and refurbishment costs
• Ignoring void periods — even 2 weeks void per year reduces annual income by ~4%
• Forgetting mortgage costs — interest payments must be deducted from net income figures
• Using optimistic rent estimates — always check comparable let properties, not asking prices

Related reading

• What’s a realistic ROI on a buy-to-let in Northern Ireland?
• The hidden costs investors forget to budget for
• Should you buy with cash or a mortgage?
• NI Property Girl property sourcing service

Frequently asked questions

What is a good rental yield for a buy-to-let property in Northern Ireland?

A gross yield of 6–8% is considered strong for Northern Ireland buy-to-let. Net yield after costs is typically 4–6%. Cash-on-cash returns on leveraged purchases can exceed 12–15% on well-sourced, well-refurbished properties.

What’s the difference between gross yield and net yield on a rental property?

Gross yield is annual rent divided by purchase price. Net yield deducts all running costs — management fees, insurance, maintenance, void periods — giving you the actual income return on the property value. Net yield is the more useful figure for comparing investment performance.

How does leverage affect property investment returns?

Leverage (using a mortgage) amplifies cash-on-cash returns because you’re earning a yield on the full property value while only deploying a fraction of it as cash. A 7% gross yield property purchased with a 25% deposit can deliver cash-on-cash returns of 12–18% when acquisition and refurbishment costs are factored in correctly.