Property & Finance
Running Costs & Tax
Upfront & Exit Assumptions
What this buy to let profit calculator tells you
A buy to let investment can look attractive when you only compare rent versus mortgage. But real profit comes from the full picture: void periods, management fees, maintenance, tax, and upfront buying costs. This calculator helps you estimate monthly cash flow, annual net income, and potential long-term profit when you sell.
How the calculation works
1) Rental income and vacancy
We start with your gross annual rent, then reduce it by your vacancy assumption. If a property is empty for part of the year, your effective rent drops quickly.
2) Operating costs
Next, we subtract recurring costs such as:
- Letting or management fee
- Maintenance reserve
- Insurance
- Service charge and ground rent
- Any additional annual expenses
3) Mortgage payments
The tool supports repayment and interest-only mortgages. Repayment lowers your loan balance over time but usually creates lower short-term cash flow. Interest-only often improves monthly cash flow, but you still owe the principal at sale.
4) Cash flow and tax
After mortgage payments, you get pre-tax cash flow. If that number is positive, tax is applied based on your chosen rate to estimate after-tax cash flow.
5) Total profit over your hold period
Long-term profit combines rental cash flow with sale proceeds. The calculator projects future value using your growth rate, subtracts selling costs and any remaining mortgage, and compares what is left against your total cash invested.
Key metrics to watch
- Gross yield: annual rent before costs ÷ purchase price.
- Net yield: net operating income ÷ purchase price.
- Cash-on-cash return: annual pre-tax cash flow ÷ total cash invested.
- After-tax monthly cash flow: what you may actually keep each month.
Practical tips for more accurate results
Use realistic vacancy and maintenance assumptions
Optimistic numbers can make a weak deal look strong. If local voids are 6–8%, don’t model 1%.
Stress test your deal
Run the calculator with higher rates, lower rent, and higher repairs. If the investment only works in perfect conditions, it is fragile.
Track true upfront cash
Include stamp duty, legal fees, and setup costs. These reduce your real return and are often forgotten in quick estimates.
Common buy to let mistakes
- Focusing on capital growth and ignoring cash flow.
- Underestimating tenant turnover and letting costs.
- Ignoring tax impact until year-end.
- Comparing deals using only gross yield.
Bottom line
A strong buy to let property should survive conservative assumptions, not just best-case scenarios. Use this calculator to test deals consistently, compare opportunities, and decide whether a property supports your income and long-term wealth goals.