Rental yield vs. total return
"Yield" means different things to different people. The gross yield in a sales listing looks good — but cash flow and return on equity tell you whether a property is actually worth it. Here are the concepts in plain language.
Gross rental yield
The simplest and most optimistic figure. It ignores costs.
Gross yield = (rent × 12) ÷ debt-free price × 100 %
Useful for quick screening, but don't decide on it — it excludes charges, taxes and any repair provision.
Net rental yield
More realistic: maintenance costs and vacancy are deducted.
Net yield = ((rent − maintenance charge) × 12 × occupancy rate) ÷ debt-free price × 100 %
Cash flow
The key figure for a leveraged investor: how much is left in hand each month after servicing the loan.
Cash flow = rent − maintenance − repair provision − loan repayment and interest − tax
Positive cash flow means the property feeds itself. Negative means you pay out of your own pocket every month — that can still be justified where capital growth is expected, but you need to know it.
Return on equity (ROE)
Because property is bought with leverage, the return is best measured against the money you actually invested, not against the full price.
ROE = annual return ÷ equity (deposit + transfer tax + transaction costs)
Total return — the whole picture
The real return comes from three sources:
- Cash flow — rental income after costs
- Loan repayment — the tenant pays down your debt (your wealth grows)
- Capital growth — how the property's value develops (the least certain part)
Many properties whose cash flow is close to zero still perform well once loan repayment and modest capital growth are counted in. And the other way round: a property with a high gross yield can be weak on total return if the area is shrinking and values are falling.
Screen on gross yield, decide on cash flow and return on equity, and judge resilience with total return and a stress test (what happens if rates rise or rents fall).
The cash flow calculator gives you the net yield, the cash flow, the DSCR and a grade — and the property page's stress test shows whether it survives a rate rise and a fall in rent.
Open the cash flow calculator →Sources and further reading
Statistics Finland (rent and price statistics), the Finnish Tax Administration (taxation of rental income). General information, not investment or tax advice; the calculations are indicative.