What is Return on investment (ROI) in property terms?
7 February 2024 (Updated 8 February 2024)
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Return on investment (ROI) is the annual rental profit divided by the money you put into the property, expressed as a percentage:
Formula
annualRentalProfit / moneyYouPutInToAcquireTheProperty Examples
| Property price | Deposit vs Mortgage | Annual rental profit | ROI calculation | ROI |
| £100,000 | £25,000 & £75,000 | £3,000 | £3,000 / £25,0000 | 12% |
Things to keep in mind
- Whilst ROI is important to keep in mind when investing in a property, capital growth should also be considered. For example, you might be better off with a property that has a ROI of 3% but a capital growth potential of 120% in the next year than a property with a ROI of 10% but but no projected capital growth.
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Property investment