Buy-to-Let Yield Calculator
This calculator goes deeper than gross or net yield — it computes both the net yield on the full property value and the cash-on-cash return on your actual invested capital (deposit plus purchase costs). The cash-on-cash return is the number that really tells you how hard your money is working in a leveraged buy-to-let investment. Use it alongside the net yield to get the complete picture of any potential purchase.
Why this matters
Leverage amplifies both returns and risk. A property yielding 5% gross can deliver a 12% cash-on-cash return with a 75% LTV mortgage — or produce a negative monthly cash flow if costs and rates have risen. Knowing both numbers is essential.
Key points
- Cash-on-cash return = (annual cash flow ÷ total cash invested) × 100
- Total cash invested = deposit + SDLT + legal fees + survey + any refurbishment
- A positive cash-on-cash return means the property generates income above all costs including the mortgage
- Higher LTV increases cash-on-cash return in good times but amplifies losses in bad times
- Mortgage rates have a major impact on cash-on-cash return — model different rate scenarios
- As a rule, aim for a cash-on-cash return of at least 6–8% before considering a buy-to-let viable
Frequently asked questions
What is cash-on-cash return and why does it matter?
Cash-on-cash return measures the actual cash income you receive on the actual cash you invested. Unlike yield (which uses the full property value), it accounts for the leverage effect of your mortgage. It is the most relevant profitability metric for a leveraged investor.
How do I calculate total cash invested?
Total cash invested includes: your deposit, Stamp Duty Land Tax (SDLT), solicitor and legal fees, survey costs, mortgage arrangement fee (if paid upfront), and any immediate refurbishment or furnishing costs.
Can cash-on-cash return be negative?
Yes — if your monthly rental income is less than your total monthly costs (mortgage, insurance, management, maintenance), you have a negative cash flow and a negative cash-on-cash return. This is common in London and high-value markets.
How does a higher deposit affect the calculation?
A higher deposit reduces your mortgage payment, improving monthly cash flow and net yield. However, it reduces the leverage effect, typically lowering cash-on-cash return. The optimal deposit level depends on rates, yields, and your risk appetite.