Rental Yield Calculator
Enter Rental Property Details
About Rental Yield Calculator
What Is Rental Yield?
Rental yield measures the annual rental income generated by a property as a percentage of its value. It is one of the simplest and most useful metrics for comparing investment properties. Gross rental yield uses total rental income before expenses, while net rental yield deducts operating costs to show the actual return. A property worth $300,000 that generates $24,000 in annual rent has a gross yield of 8%. After $8,000 in expenses, the net yield drops to 5.3%. Both figures are useful: gross yield for quick screening, net yield for actual return assessment.
Gross vs Net Rental Yield
Gross Yield = (Annual Rental Income / Property Value) x 100. Net Yield = ((Annual Rental Income - Annual Expenses) / Property Value) x 100. Annual expenses include property management fees (8-12% of rent), maintenance and repairs (typically 1-2% of property value), insurance, property taxes, vacancy allowance (typically 5-8% of rent), and any HOA fees.
How to Use This Calculator
Enter the property value, monthly rental income, and annual operating expenses. The calculator shows both gross and net rental yield, monthly and annual cash flow before financing, and a comparison to average yields in different property markets to contextualize your results.
Frequently Asked Questions
What is a good rental yield?
Gross yields of 5-8% are typical for residential properties. Net yields of 3-5% are common after expenses. Higher yields often come with higher risk, less desirable locations, or lower appreciation potential.
Is rental yield the same as cap rate?
Net rental yield is very similar to cap rate. The difference is subtle: cap rate uses NOI which may include different expense items. In practice, they produce nearly identical results when calculated consistently.
Should I prioritize yield or appreciation?
Depends on your strategy. Cash flow investors prioritize yield for immediate income. Growth investors accept lower yields in areas with strong appreciation potential. A balanced approach seeks acceptable yield in appreciating markets.
Related Tools
