How to Calculate Buy-to-Let
What is Buy-to-Let?
Buy-to-let calculators evaluate rental property returns. Gross yield = annual rent / property value. Net yield subtracts all costs including mortgage, maintenance, and management fees.
Formula
Gross yield = (Annual rent / Property value) × 100%; Net yield = (Annual rent − All costs) / Property value × 100%
- R
- Annual rental income (Currency)
- V
- Property market value (Currency)
- C
- Annual operating costs (Currency)
Step-by-Step Guide
- 1Gross yield = (Annual rent / Value) × 100
- 2Net yield = (Annual rent − costs) / Value × 100
- 3Target gross yield: 5–8%
- 4Include void periods and repairs in cost estimates
Worked Examples
Input
Property £300k, rent £1,500/mo, costs £7k/yr
Result
Gross yield = 6%; Net yield = 3.6%
Frequently Asked Questions
What costs should I include?
Include mortgage, insurance, maintenance (1–2%), property tax, void periods (5–10%), management fees (8–10%), utilities you cover, and capital expenditure reserves.
What's a good BTL yield?
Gross yield 5–8% is average. Net yield 3–5% is typical after costs. Anything < 2% net is hard to justify unless expecting significant capital growth.
Should I include capital appreciation?
Calculate yield on current rental income. Appreciation is bonus. If you're relying on 8% appreciation annually to make BTL work, the rental yield is too low.
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