Rental Yield Calculator
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Calculate gross and net rental yield. Enter property price, monthly rent, and annual expenses for a complete picture.
Net Rental Yield
0%
📐 Formula
Gross Yield = (Annual Rent ÷ Property Price) × 100. Net Yield = ((Annual Rent − Expenses) ÷ Property Price) × 100
How to Use the Rental Yield Calculator
Enter the property value
Input the current market value or recent purchase price. For a prospective purchase, use the asking price. Yield is directly tied to what you pay — overpaying compresses yield regardless of rental income.
Enter monthly rental income
Input the current or projected monthly rent. For an occupied property, use the lease rate. For a vacant property, research comparable rentals in the immediate area.
Enter annual expenses
Include all costs that reduce net yield: property tax, landlord insurance, maintenance budget (typically 1% of property value annually), property management fees (8–12% of rent if managed), and vacancy allowance (5–8% of annual rent).
Compare gross vs net yield
Gross yield ignores expenses and overstates returns. Net yield is the accurate measure of investment performance. A property with 7% gross yield and high expenses may have a net yield below 4%.
Gross vs Net Rental Yield: Why the Difference Matters
Gross rental yield divides annual rent by property value. A $450,000 property renting for $2,000/month earns $24,000 annually: $24,000 ÷ $450,000 = 5.3% gross yield. This is the headline number often quoted in property listings and media. It is useful for quick comparisons across markets but meaningless as a true return measure because it ignores all costs of ownership.
Net rental yield subtracts all annual operating expenses before dividing by property value. On the same property: $24,000 rent − $5,400 property tax − $1,200 insurance − $4,500 maintenance (1%) − $2,400 management (10%) − $1,200 vacancy (5%) = $9,300 net income. Net yield: $9,300 ÷ $450,000 = 2.1%. The spread between gross and net yield in this example is 3.2 percentage points — common for higher-cost urban markets where property taxes and management costs are elevated.
What Is a Good Rental Yield?
Benchmarks vary significantly by market, property type, and investment strategy. For residential property in US markets: a gross yield of 6–8% is generally considered healthy in secondary and tertiary cities; 4–6% is typical for major metropolitan areas (New York, Los Angeles, San Francisco) where appreciation expectations compensate for lower income yields. Net yields below 2–3% in high-cost markets mean the property barely covers ownership costs — the investment thesis depends almost entirely on capital appreciation. For investors seeking income rather than appreciation, a minimum net yield of 4–5% is a common threshold. The rule of thumb: if the net yield is below the 10-year Treasury rate, the risk-adjusted case for property over bonds is difficult to justify on income alone.
Yield vs Cap Rate: Understanding the Difference
Rental yield and cap rate are closely related but not identical. Rental yield calculates return relative to the total property value (including land). Cap rate uses Net Operating Income (NOI) — which excludes mortgage costs but includes all operating expenses — divided by property value. For residential properties, the two figures are often similar. The primary distinction: cap rate is the standard metric in commercial real estate and among institutional investors; rental yield is more common in residential investment contexts. Use cap rate when comparing commercial properties; use net rental yield for residential portfolio analysis.
Sources & Methodology
Calculations are based on the most current publicly available data from authoritative government and industry sources: