What 9%+ NET Yield Actually Looks Like: A Real 5-Bed HMO Breakdown
June 22, 2026
When investors see a 9%+ NET yield advertised on an HMO, the most important question is usually simple: what does that actually look like in real numbers?
A headline yield can be useful, although it only becomes meaningful when the purchase price, refurbishment cost, expected rent roll, bills, management fees, and operating assumptions are shown clearly. That is especially important with HMOs, because the difference between gross yield and NET yield can be significant once utilities, council tax, broadband, management, maintenance, and void periods are properly considered.
At Foot Forward Property Investments, we always lead with the NET yield, rather than just the gross yield. That is because NET yield is closer to the income that actually lands in the investor’s pocket after the agreed operating deductions have been accounted for.
The example below is a real-world 5-bed HMO scenario owned by one of our investors. It is not marketing spin. It is not a made-up deal created to fluff the numbers. It is a practical breakdown of how a 9%+ NET return can be reached when the purchase, refurbishment, furnishing, rental forecasting, and management structure are brought together properly.
For investors comparing live opportunities, you can also view our current fully managed HMO investments here: HMO for sale with Foot Forward Property Investments.
The real 5-bed HMO investment figures
Here is the full breakdown of this investor-owned HMO scenario.
| Item | Amount |
|---|---|
| Existing property shell price | £142,000 |
| Refurbishment, extension, and furnishing package | £143,693 |
| Overall investment price used for yield calculation | £287,643 |
| Forecast gross annual rent roll | £34,320 |
| Forecast monthly gross rent roll | £2,860 |
| Forecast monthly rent per room, based on 5 rooms | £572 |
| Monthly operating deduction used in the calculation | £600 |
| Annual operating deduction used in the calculation | £7,200 |
| Forecast annual NET income | £27,120 |
| Forecast NET yield | 9.43% |
The total investment price, including the existing shell and the refurbishment, extension, furnishing, and associated project costs, came to £287,643.
Using our real-life room rental estimator, the forecast gross income for this 5-bed/5 Bath HMO is £34,320 per year. After deducting the agreed monthly allowance for bills and management, the forecast annual NET income is £27,120.
That gives the investor a forecast 9.43% NET return.
How the 9.43% NET yield is calculated
The yield calculation is:
Forecast annual NET income ÷ total investment price x 100
For this HMO, that means:
£27,120 ÷ £287,643 x 100 = 9.43% NET yield
This is the figure we believe investors should focus on first, because it reflects the income after the operating deduction used in the forecast. A gross yield may look attractive on paper, although it does not show the same practical picture if bills, management, and day-to-day running costs have not been accounted for.
Gross income versus NET income
The forecast gross rent roll for this property is £34,320 per year, which works out at £2,860 per month across 5 rooms.
On a room-by-room basis, that means the rental forecast is based on approximately £572 per room per month.
From that gross income, the forecast deducts £600 per month, equal to £7,200 per year. This deduction covers the main operating items built into this specific forecast, including:
- Gas
- Electric
- Broadband
- Council tax
- TV licence
- Water rates
- Our management fee of £200 + VAT per month
The management fee is included within the £600 monthly deduction. At £200 + VAT, the management element is £240 per month, with the remaining allowance covering the listed bills and utilities.
After the £7,200 annual deduction, the forecast income becomes:
£34,320 gross annual income – £7,200 annual deduction = £27,120 forecast annual NET income
That £27,120 is the figure used to calculate the 9.43% NET yield.
Why the stamp duty position matters
Another detail investors sometimes miss is the difference between the total investment price and the price on which Stamp Duty Land Tax is typically calculated.
In this scenario, the existing property shell price was £142,000. That is the property purchase price, and it is the figure the investor pays SDLT on, rather than the full total investment amount of £287,643.
This can make a material difference when assessing the upfront costs of an HMO investment. The total investment price includes the shell, refurbishment, extension, furniture, and associated project costs, although the SDLT position relates to the property acquisition price itself.
As always, investors should confirm their own tax position with their solicitor or tax adviser before committing to any purchase, especially where personal circumstances, company structures, second-property rules, or wider tax planning may affect the final SDLT liability.
Why we lead with NET yield, not just gross yield
Gross yield is easy to calculate. It simply compares the expected rent roll against the investment price.
In this example, the gross yield would be:
£34,320 ÷ £287,643 x 100 = 11.93% gross yield
That number is useful, although it does not show the whole picture. HMOs usually have more moving parts than a single-let property. Bills, broadband, council tax, compliance, management, and maintenance all need to be considered if the investor wants a clearer view of expected income.
That is why we lead with NET yield. The NET figure gives a more useful picture of what the investor may actually receive after the agreed forecast deductions have been made.
In this example, the forecast NET income is £27,120 per year, which creates a 9.43% NET yield against the total investment price of £287,643.
What is included in the £287,643 investment price?
The overall investment price in this scenario includes the existing property shell, the refurbishment works, the extension, and the furnishing package required to turn the property into a completed 5-bed HMO investment.
The main cost areas are:
| Cost area | Amount |
|---|---|
| Existing property shell | £142,000 |
| Refurbishment, extension, and furnishing package | £143,693 |
| Overall investment price used for yield calculation | £287,643 |
This distinction matters because investors are not simply buying a standard house and hoping to convert it themselves. The investment is structured around creating a completed HMO that is designed for rental performance, tenant demand, and ongoing professional management.
A successful HMO is not only about adding bedrooms. The layout, room quality, communal space, finish, furnishings, compliance, local rental demand, and ongoing management all affect the final investment outcome.
A realistic note on HMO returns
HMO returns are not guaranteed.
The 9.43% NET yield in this example is an expected return based on the stated rental forecast, full occupancy, no void periods, and no unexpected maintenance costs. Those assumptions matter. If a room is empty, if rent is unpaid, if repair costs arise, or if market rents change, the actual return may be different from the forecast.
That is why we believe the management side of an HMO investment is so important. Our in-house lettings team stays close to occupancy, tenant enquiries, room pricing, rent collection, and day-to-day property management. Their role is to help protect income by keeping rooms occupied where possible, dealing with tenant issues promptly, and responding to the normal operational realities that come with shared housing.
No responsible HMO provider should imply that voids or maintenance never happen. They can happen. The key is whether the investment has been structured and managed with those realities in mind.
Why the Price Lock Promise matters
Refurbishment projects can become stressful when costs change unexpectedly after an investor has committed.
Our Price Lock Promise is designed to give investors greater certainty. Once the investment price is agreed, investors are protected against unexpected price rises within the agreed scope. That means the investor has a clearer understanding of the total investment amount before moving forward.
For this scenario, the yield calculation is based on the overall investment price of £287,643. That clarity matters because the investor can assess the forecast NET income against a known investment figure, rather than worrying that unexpected refurbishment increases could reduce the return later.
What this example tells us about 9%+ NET HMO yields
This real-world scenario shows how a 9%+ NET HMO yield can work when the numbers are broken down properly.
The investor’s total investment price was £287,643. The forecast gross annual rent roll was £34,320. After deducting the £600 monthly allowance for bills and management, the forecast annual NET income was £27,120.
That creates a forecast 9.43% NET yield.
For investors, the key lesson is not just that the return is above 9%. The more important lesson is how the return is built. A credible HMO yield should be supported by a clear purchase price, a clear refurbishment and furnishing cost, a realistic rent roll, transparent deductions, and responsible risk language around occupancy, maintenance, and market conditions.
That is the standard we believe investors should expect when reviewing an HMO opportunity.
If you are comparing fully managed HMO investments and want to see current opportunities, visit our main page for HMO properties for sale.
Frequently asked questions
What does NET yield mean on an HMO?
NET yield is the expected annual income after agreed operating deductions, shown as a percentage of the total investment price. In this example, the forecast annual NET income is £27,120, and the total investment price is £287,643, creating a forecast 9.43% NET yield.
Is the 9.43% NET return guaranteed?
No. HMO returns are not guaranteed. This example is based on forecast income, 100% occupancy, no void periods, and no unexpected maintenance. Actual returns can vary depending on tenant demand, occupancy, maintenance, rent collection, market conditions, and other factors.
What is the gross rent roll in this example?
The forecast gross rent roll is £34,320 per year, or £2,860 per month. Based on 5 rooms, that works out at approximately £572 per room per month.
What costs are deducted before reaching the NET income figure?
The forecast deducts £600 per month, or £7,200 per year. This includes gas, electric, broadband, council tax, TV licence, water rates, and our management fee of £200 + VAT per month.
What is the difference between the shell price and the total investment price?
The shell price is the cost of the existing property before the refurbishment, extension, and furnishing package. In this example, the shell price is £142,000. The total investment price used for the yield calculation is £287,643.
Is Stamp Duty paid on the full £287,643?
In this scenario, Stamp Duty Land Tax is paid on the property shell price of £142,000, not the total investment price of £287,643. Investors should always confirm their own SDLT position with their solicitor or tax adviser before proceeding.
Why does Foot Forward lead with NET yield?
We lead with NET yield because it gives investors a clearer picture of expected income after the agreed deductions have been accounted for. Gross yield can be useful, although NET yield is usually more meaningful when assessing what may actually land in the investor’s pocket.
This blog post was written by Thomas Abram – Group Marketing Executive