Property investment return

What the figures mean

Rental income after operating costs (NOI)

Rent received less property operating costs. Loan payments and taxes have not yet been deducted.

Simple example: Annual rent of €12,000 less €3,000 of costs leaves €9,000 before debt payments and tax.

Calculated annual investment return (IRR)

The annual rate at which future cash flows valued today equal the initial outlay. It is a scenario calculation, not a guaranteed rate; some cash-flow patterns have no unique result.

Simple example: Invest €100 now and receive €120 one year later: the calculated return is 20%.

Cash flows valued today, less initial outlay (NPV)

Future receipts and payments are valued today using the chosen required return, then the initial investment is subtracted. This is not the undiscounted profit.

Simple example: Invest €100 today and receive €120 after one year at a required 10%: 120 / 1.10 − 100 ≈ €9.09.

Debt payment coverage (DSCR)

Rental income after operating costs divided by debt payments for the same year. It is a ratio, not a percentage; taxes and capital spending are excluded.

Simple example: €9,000 income divided by €6,000 debt payments gives 1.5 times coverage, not bank approval.

Annual cash return on your own investment (Cash-on-cash)

Yearly cash after operating costs and debt payments divided by your own initial investment. Property sale proceeds are excluded; this model calculates it before tax.

Simple example: €3,000 annual cash on €30,000 of your own money gives a 10% cash return.