Investment & yield
ROI (Return on Investment)
ROI measures the total gain from a property relative to what was invested, combining rental income and any change in value.
Return on investment expresses profit as a percentage of the capital committed, and for real estate it can blend rental income (yield) with capital appreciation on sale. A fuller analysis accounts for purchase costs, financing, service charges, and holding period, and cash-on-cash return is often used when a mortgage is involved to reflect return on actual cash deployed. ROI figures are scenario-dependent and forward-looking estimates are not guarantees; this is general information, not investment advice.
Related terms
- Gross Yield — Gross yield is annual rental income divided by the property's purchase price, expressed as a percentage before any costs.
- Net Yield — Net yield is annual rental income minus operating costs, divided by the property's value, giving a truer measure of return than gross yield.
- Capital Appreciation — Capital appreciation is the increase in a property's market value over time, realised as profit when it is sold for more than it cost.
- Mortgage Cap / LTV — The mortgage cap, or loan-to-value limit, is the maximum share of a property's value a bank may lend, capping how much a buyer can finance.