Net yield
Net yield is the annual net operating income of a property divided by the total investment, including acquisition costs — the return you actually keep before financing.
Formula: Net yield = NOI ÷ (purchase price + acquisition costs) × 100
Gross yield
Gross yield is annual rental revenue divided by the purchase price, before any costs.
Formula: Gross yield = annual revenue ÷ purchase price × 100
Net operating income (NOI)
NOI is annual rental revenue minus all operating costs — platform fees, cleaning, management, utilities, insurance, property tax and maintenance — before debt service and income tax.
Formula: NOI = annual revenue − variable costs − fixed costs
Average daily rate (ADR)
ADR is the average revenue earned per booked night, after platform discounts but before fees.
Formula: ADR = total room revenue ÷ booked nights
Occupancy rate
Occupancy rate is the share of available nights that are actually booked over a year.
Formula: Occupancy = booked nights ÷ available nights × 100
Break-even occupancy
Break-even occupancy is the occupancy rate at which revenue exactly covers all operating costs (and debt service, if included).
Formula: Break-even = (fixed costs ÷ (ADR × (1 − variable cost %))) ÷ 365 × 100
Cash-on-cash return
Cash-on-cash return is annual cashflow after debt service divided by the equity you actually invested (down payment plus acquisition costs).
Formula: Cash-on-cash = (NOI − annual debt service) ÷ equity invested × 100
Debt service coverage ratio (DSCR)
DSCR measures how many times NOI covers the annual mortgage payments (interest plus principal).
Formula: DSCR = NOI ÷ annual debt service
Acquisition costs
Acquisition costs are the one-off costs of buying on top of the price: transfer tax or stamp duty, notary, land registry, legal and agent fees.
Formula: Total investment = purchase price × (1 + acquisition cost %)
Short-term rental (STR)
A short-term rental is a furnished home let for short stays — typically under 30 nights — through platforms such as Airbnb, Booking.com or Vrbo, as opposed to a long-term tenancy.
Formula: STR revenue = ADR × 365 × occupancy
Frequently asked questions
Which metric matters most for a holiday rental?
Net yield, because it includes all operating and acquisition costs. Pair it with break-even occupancy to understand downside risk and with DSCR if you finance the purchase.
Are these the same definitions Terrivio uses in reports?
Yes. The glossary mirrors the deterministic formulas in Terrivio's calculation engine.