Property Deal Analyser

Total cash invested

Your deposit, plus refurbishment and fit-out, legal and survey costs, and stamp duty. This is the money you commit before the first rent arrives.

Total cost

The purchase price plus the same refurbishment, legal and stamp duty costs.

Stamp duty

Worked out band by band at the higher rates for an additional property, with the 2% surcharge if you tick non-UK resident. The bands match the stamp duty calculator, where you can see the breakdown.

Gross yield

Annual rent divided by total cost, not just the purchase price, so the fit-out and buying costs count.

Net yield, before finance

Annual rent less voids, management and monthly costs, divided by total cost. Mortgage interest is left out so you can compare properties regardless of how they are financed.

Monthly and annual cash flow

Monthly rent, minus the void allowance, the management fee on rent collected, your monthly costs and the interest-only mortgage interest (the loan multiplied by the rate, divided by 12). Annual cash flow is that figure multiplied by 12, before personal tax.

Cash-on-cash return

Annual cash flow divided by total cash invested. The headline figure: it shows how hard the money you put in is working each year.

A worked example

With the example figures, a £200,000 purchase with a 25% deposit needs £50,000 down. Stamp duty at additional property rates is £11,500, so with £15,000 of fit-out and £2,500 of legal and survey costs, total cash invested is £79,000 and total cost is £229,000. Rent of £1,200 a month gives a gross yield of 6.29%. After voids, management and £150 of monthly costs, £876 a month remains: a net yield of 4.59%. Less £688 of interest, cash flow is about £189 a month, or £2,262 a year, a cash-on-cash return of 2.86%.

Before you budget, read the hidden costs first-time investors always underestimate.