Yield vs return on cash.

Two properties, same street. One “yields 9%”, the other “returns 15% on cash”. These numbers measure completely different things, and knowing which one to reach for is half of deal analysis.

Yield: a property metric

Gross yield = annual rent ÷ purchase price.A £200,000 house renting at £1,500/month is £18,000 ÷ £200,000 = 9%. It ignores costs and ignores how you funded it — which is exactly why it’s useful: it’s a fast, like-for-like screen for comparing properties and areas. Net yield does the same after running costs (say 12–30% of rent depending on the asset), telling you what the property itself genuinely produces.

Return on cash: an investor metric

Return on cash (ROCE) = annual cashflow ÷ the cash you actually have in the deal.Same house, bought with a 75% mortgage: you’ve put in roughly £50,000 plus costs. After running costs and mortgage interest the cashflow might be £5,500 a year — about 10% on your cash, against a 9% gross yield. Now refinance after adding value, pull half your cash back out, and the same cashflow against £25,000 of remaining cash is 20%+. Leverage and recycling change ROCE without changing the property at all.

The edge case that proves the point

In a full all-money-out deal — refinance returns everything you put in — your remaining cash is zero and ROCE is effectively infinite, while the yield hasn’t moved. That’s why portfolio builders chase BRR deals at modest yields: the return that compounds is the return on your cash, not the property’s.

Which number decides?

Screen with yield, decide with return on cash — and sanity-check with monthly cashflow, because percentages don’t pay for a boiler. The Deal Shaper shows all three on every deal, after the finance and the ICR stress test, so the comparison is honest.