That calculation is Return on investment (ROI) – calculated as the annual rental profit divided by the money you put in. If you buy wholly in cash, the money you put in is the same as the cost of acquiring the asset, so your ROI and net yield will be identical. But if you use a mortgage, your ROI will be higher than your net yield. For example, our hypothetical property cost £100,000 and generates a £5,000 annual profit, giving a net yield of 5%. But say that you only put in £20,000 in cash, with the rest of the purchase price being funded by a mortgage. Your ROI is therefore £5,000 profit
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