Property investment is decided with four numbers, and every guide in this hub exists to make one of them legible. Rental yield tells you how the rent compares with the price. Cash flow tells you whether you can hold the property month to month. Cap rate and DSCR let you compare deals and loans without arguing about personal circumstances. None of them is the whole answer, and the fastest way to a bad purchase is to pick a favourite metric and ignore the other three.

The order matters. Yield first: it is the income screen that rules out whole streets in seconds. Then cash flow, because a property you cannot hold is a property you will eventually be forced to sell. Then cap rate and DSCR, which tell you how the deal compares with its neighbours and whether the lender will even say yes. Only after all four look sane do you start arguing about appreciation, tax, and the exit.

The metrics, and the questions they answer

  • Rental yield: how does the rent compare with the price?
  • Cash flow: can I hold this property after the mortgage?
  • Cap rate: is this deal priced like its neighbours, ignoring financing?
  • DSCR: will a lender approve this income against this loan?
  • ROI and cash-on-cash: what does my actual cash in the door return?

The guides below go deep on each metric — yield calculation and benchmarks, ROI, cap rate, DSCR, cash flow, and the total-return question that ties them together. When you have a real property in front of you, run the Rental Yield Calculator and the Cash Flow Calculator first, then the DSCR Calculator before you talk to a lender, and the ROI Calculator for the levered picture.

The order of operations when you run a deal

When a property arrives in front of you, resist the urge to open a mortgage calculator first. The sequence that prevents self-deception runs in the opposite direction. Start with the yield on the full value, because it tells you whether the asset itself earns its keep regardless of how you pay for it. Then subtract real operating costs and re-run it as net yield. Then layer on the mortgage you would actually be offered — deposit, rate, term — and see whether the cash flow survives a vacancy and a repair in the same year. Only then does the question of appreciation, tax, and the exit get to speak, because everything after that point is icing on a cake that the first four steps decide.

The order matters because each step catches a different kind of self-deception. Yield catches the overpriced. Net yield catches the over-maintained. Cash flow catches the over-leveraged. And the appreciation question catches the over-optimistic. A deal that survives all four may still be mediocre, but it will never be a surprise, and surprise is the expense that actually ruins property investors.

Start with the Rental Yield Calculator and the Cash Flow Calculator for every deal, add the Cap Rate Calculator when you compare two properties, and bring the DSCR Calculator into the room before the lender does. The guides below put each metric through worked examples with real numbers, so the vocabulary stops being jargon and starts being the way you talk about a deal.

Frequently asked questions

What is the most important metric in property investing?

There is no single winner: yield screens income, cash flow checks whether you can hold, cap rate compares deals, and DSCR decides whether the lender agrees. Investors who pick one favourite metric tend to buy the property that flatters it — which is exactly the property that disappoints on the others.

What is a good rental yield for an investment property?

Gross yields of 6 to 8 percent and net yields of 4 to 6 percent are common in many markets, but the honest benchmark is your own mortgage rate plus the yield on low-risk alternatives. A net yield that barely clears your interest cost is not income, whatever the brochure says.

What is the difference between ROI and cap rate?

Cap rate divides net operating income by the property value, ignoring financing, so it compares buildings fairly. ROI divides the same income by the cash you actually put in — deposit, costs, refurbishment — so it measures your own money's return, including the effect of leverage.

Why do lenders use DSCR for rental properties?

Debt service coverage ratio is net operating income divided by annual loan payments. Lenders want headroom — often 1.25 or more — because a vacancy can eliminate the income that repays the loan. The calculator is the fastest way to see whether a deal clears the bar before you spend on applications.

How many properties do I need to live off rental income?

Work backwards from the income you need and the net cash flow each property actually produces. If each unit nets $6,000 a year after the mortgage and costs, replacing a $48,000 income takes eight units — and the vacancy and repair risk grows with every additional property, not in a straight line.