Rental Yield Calculator
Calculate gross and net rental yield for any investment property based on property value, annual rent, and expenses.
Results
Visualization
How It Works
Rental yield measures the annual return on a rental property as a percentage of its value. Gross yield uses total rent, while net yield subtracts operating expenses, giving you a more realistic picture of your investment performance.
The Formula
Variables
- Annual Rent — Total rent collected over 12 months before any deductions
- Property Value — Current market value or purchase price of the property
- Annual Expenses — Yearly operating costs including taxes, insurance, maintenance, and management fees
- Gross Yield — Return percentage before expenses are deducted
- Net Yield — Return percentage after operating expenses are subtracted
Worked Example
You buy a property for $300,000 and collect $21,600 per year in rent ($1,800/month). Your annual expenses are $6,000. Gross yield = ($21,600 / $300,000) x 100 = 7.2%. Net yield = (($21,600 - $6,000) / $300,000) x 100 = 5.2%. The 2% difference represents the drag from operating costs.
Practical Tips
- A gross yield above 7% is generally considered strong in most U.S. markets.
- Always use net yield for comparing properties — gross yield hides expense differences.
- Include vacancy losses in your annual expenses for a realistic net yield.
- Yields vary dramatically by market — 4% may be excellent in San Francisco but weak in Cleveland.
- Track your yield annually; rising expenses or flat rents will erode returns over time.
Frequently Asked Questions
What is a good rental yield?
In most U.S. markets, a gross yield of 6-10% is considered solid. Net yields of 4-7% are typical for well-managed properties. High-yield markets (8%+) often carry more risk or require more management.
What is the difference between rental yield and cap rate?
They are very similar. Net rental yield and cap rate both divide NOI by property value. In practice the terms are often used interchangeably, though cap rate is more common in commercial real estate.
Should I use purchase price or current market value?
Use purchase price to track your actual return on investment. Use current market value to compare against selling and reinvesting elsewhere. Both perspectives are useful.
Does rental yield include mortgage payments?
No. Rental yield measures the property's performance independent of how it's financed. Mortgage payments are a financing cost, not an operating expense. Use cash-on-cash return to factor in financing.
How do I improve my rental yield?
Increase rent (renovations, better marketing), reduce expenses (shop insurance, handle minor maintenance yourself), or buy below market value. Reducing vacancy is often the single biggest lever.