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Commercial HMO Yield Calculator
Appraise a large or sui generis HMO on its income: net yield at the asking price and the value on your target yield.
This calculator works out the net operating income of a commercial HMO, the yield an asking price gives you, and what the building is worth on the net yield you are aiming for. It is an investment appraisal on your own figures, not a valuation or a lending decision.
Your figures
Test an asking price against the net income the building produces and the yield you are aiming for.
£10,000 a month
Share of gross rent: management, voids, repairs, utilities, insurance, licensing
Your own return target or the yield on comparable sales. 8% is a starting point, not a market figure.
Your results
- Annual gross rent
- £120,000
- Operating costs (25%)
- -£30,000
- Net operating income
- £90,000
- Gross yield at price
- 12.00%
- Net yield at price
- 9.00%
- Income value vs price
- £125,000 above price
At this price the net yield is 9.00%, above your 8% target yield.
Illustrative figures only, based on the numbers you enter. Not a mortgage offer.
How we calculate Commercial HMO Yield
Methodology and data sources, updated October 2026
Formulas
- Net operating income
Annual gross rent - (Annual gross rent × Operating costs %)Income left after running the building, before any mortgage interest or tax.
- Value on target yield
Net operating income ÷ Target net yield %The price at which the income would deliver exactly the net yield you are aiming for.
- Net initial yield at price
(Net operating income ÷ Purchase price) × 100The net yield the purchase price gives on day one.
- Gross yield at price
(Annual gross rent ÷ Purchase price) × 100Yield before operating costs.
- Difference between price and income value
Value on target yield - Purchase pricePositive when the income supports a higher value than the price at your target yield; negative when it supports less.
Data sources
- Yes:Your own rent, cost and price figures
- Yes:Standard investment yield method used in commercial property appraisal
Key assumptions
- Target net yieldSet it from comparable evidence or your own return target; no market yield is assumed
- As entered
- Operating costsOne figure covering management, voids, repairs, utilities, insurance, licensing and business rates where you pay them
- % of gross rent
- Purchase costsStamp duty, legal and survey fees are not added to the price
- Not included
- Finance and taxYields are before mortgage interest and tax
- Not included
- RentNo rental growth or capital growth is projected
- Held flat
Next steps
Free initial review
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