Return on investment
Is this property worth buying as a rental?
Gross yield is the figure that appears in listings and the least useful one, because it ignores every cost. The gap between it and net yield is the whole question, and on a short-term rental that gap is much wider than on a long let: commission, cleaning and turnover churn are real money and they scale with bookings.
This models a cash purchase and an income stream. It does not model financing, capital growth or the cost of selling, and it will not tell you whether the local rules permit short-term letting at all — which, in a growing number of cities, is the question that decides the rest.
What this assumes
- Net operating income = revenue − running costs.
- Gross yield = revenue ÷ price. Net yield = net operating income ÷ price.
- Payback = price ÷ net operating income, in years.
- Cash purchase. A mortgage changes both the money at risk and the return on it, and this does not model financing.
- No capital growth, no depreciation, no sale costs. It measures the property as an income stream and nothing else.
An estimate, not advice. It cannot know your market, your local rules or your tax position. Check the figures against your own booking data before acting on them.