What You Really Earn from Your Portfolio

Most landlords think they know what they earn from a property. They’ll say, “It rents for £1,200 a month,” and nod with quiet satisfaction. But that’s not what they earn. That’s what comes in. The difference sounds semantic until you realise it’s the gap between owning an asset and owning a job.

The Illusion of Rental Profit

The illusion of rental profit starts with how simple rent looks. Money lands in your account each month, and it feels like income. But if you strip away emotion and treat it like a business ledger, the story changes.

Gross rent is meaningless without costs. The average landlord remembers the mortgage, maybe insurance, and forgets the rest. But the rest is where most of the profit disappears.

The Real Math

Imagine a two-bed flat that rents for £1,200 per month. That’s £14,400 a year. If you have a £900 mortgage payment, you might think you’re clearing £300 a month, or £3,600 a year. But that’s not the real number.

Start deducting what’s actually happening in the background:

Maintenance – even well-kept properties cost money. Boilers fail, taps leak, paint fades. Call it £600 a year on average.
Void periods – one month empty every couple of years is normal. That’s roughly £600 a year if you smooth it over time.
Insurance and compliance – landlord insurance, gas safety checks, electrical inspections: another £300 a year.
Agent or management fees – if you use one, 10–12% of rent is standard. Say £1,500.
Accountant and admin – small but real. Call it £200.
Tax – if you’re a higher-rate taxpayer, 40% of your profit after mortgage interest disallowance can go straight to HMRC.

Add those up and your £3,600 “profit” becomes roughly £1,000–£1,200. That’s before you’ve priced in your time managing repairs, chasing rent, or answering tenant calls at 9 p.m.

On a £300,000 property, your yield — what you actually earn — is closer to 0.4% than 4%.

Why Most Landlords Miss This

Most landlords don’t track costs properly. They treat their property like a side project rather than a small business. Spreadsheets sit half-filled, invoices go unlogged, and a few hundred here or there vanish unnoticed. The result is a false sense of profitability.

They also confuse leverage with income. A mortgage amplifies returns when prices rise, but it doesn’t create profit in the short term. It’s a cost of ownership, just like materials in manufacturing or wages in a factory.

How to Increase Your Real Returns

Once you see the numbers clearly, a few things follow.

First, tracking your real yield changes how you think about risk. A 0.4% return doesn’t justify sleepless nights over repairs or regulation. You start asking whether the asset is working for you, or whether you’re working for it.

Second, you can improve what you measure. If you know where the yield leaks are, you can plug them:

Refinance an old mortgage.
Negotiate insurance and service contracts.
Do small repairs yourself where possible.
Raise rent in line with inflation instead of falling behind.

Third, you stop comparing gross rents and start comparing net efficiency. Two landlords can each charge £1,200 a month, but one might keep twice as much because they run tighter operations.

Know Your True Yield

That’s the real takeaway: know your true yield. Not what you hope it is, not what it looks like on paper, but what’s left after every cost, tax, and bit of friction.

Tracking it property by property can change how you invest. It reveals which homes are carrying their weight and which are dragging.

Gross rent flatters you. Net yield tells you the truth.