function calculateRentalYield() {
// Get Inputs
var price = parseFloat(document.getElementById('propertyPrice').value);
var rent = parseFloat(document.getElementById('monthlyRent').value);
var taxes = parseFloat(document.getElementById('annualTaxes').value);
var insurance = parseFloat(document.getElementById('annualInsurance').value);
var hoa = parseFloat(document.getElementById('monthlyHOA').value);
var maintenance = parseFloat(document.getElementById('maintenance').value);
var vacancy = parseFloat(document.getElementById('vacancyRate').value);
var closing = parseFloat(document.getElementById('closingCosts').value);
// Validation
if (isNaN(price) || isNaN(rent)) {
alert("Please enter at least the Property Price and Monthly Rent.");
return;
}
// Set defaults for optional fields if empty
if (isNaN(taxes)) taxes = 0;
if (isNaN(insurance)) insurance = 0;
if (isNaN(hoa)) hoa = 0;
if (isNaN(maintenance)) maintenance = 0;
if (isNaN(vacancy)) vacancy = 0;
if (isNaN(closing)) closing = 0;
// Calculations
var annualGrossRent = rent * 12;
var vacancyLoss = annualGrossRent * (vacancy / 100);
var effectiveGrossIncome = annualGrossRent – vacancyLoss;
var annualHOA = hoa * 12;
var totalAnnualExpenses = taxes + insurance + annualHOA + maintenance;
var noi = effectiveGrossIncome – totalAnnualExpenses; // Net Operating Income
var totalInvestment = price + closing;
// Gross Yield = (Annual Gross Rent / Price) * 100
var grossYield = (annualGrossRent / price) * 100;
// Net Yield (Capitalization Rate) = (NOI / Price) * 100
// Note: Cap rate is typically based on asset value (Price), not total investment including closing costs,
// but some investors prefer (NOI / Total Cost). We will use Price to adhere to standard Cap Rate definition.
var netYield = (noi / price) * 100;
var monthlyCashFlow = noi / 12;
// Display Results
document.getElementById('grossYieldResult').innerHTML = grossYield.toFixed(2) + "%";
document.getElementById('netYieldResult').innerHTML = netYield.toFixed(2) + "%";
document.getElementById('grossIncomeResult').innerHTML = "$" + annualGrossRent.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('expensesResult').innerHTML = "$" + (totalAnnualExpenses + vacancyLoss).toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}) + " (incl. vacancy)";
document.getElementById('noiResult').innerHTML = "$" + noi.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('cashFlowResult').innerHTML = "$" + monthlyCashFlow.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
// Show result div
document.getElementById('results').style.display = "block";
}
Understanding Rental Yield: A Guide for Real Estate Investors
Investing in real estate is one of the most reliable ways to build wealth, but not every property is a good investment. To distinguish a profitable asset from a money pit, investors rely on key metrics like Gross Rental Yield and Net Rental Yield (Capitalization Rate). This calculator helps you analyze the potential return on investment (ROI) for a rental property before you sign the paperwork.
Why calculate yield? High property appreciation is great, but cash flow keeps the business running. Rental yield measures the cash generated relative to the property's cost, giving you a clear picture of its income-generating efficiency.
Gross Yield vs. Net Yield
Understanding the difference between these two figures is critical for accurate financial planning:
Gross Rental Yield: This is a quick calculation that looks at total annual rent vs. the property price. It does not account for expenses. While useful for screening properties quickly, it can be misleading because it ignores costs like taxes, insurance, and maintenance.
Net Rental Yield (Cap Rate): This is a more precise metric. It subtracts all operating expenses (taxes, insurance, HOA, vacancy, maintenance) from the rental income to find the Net Operating Income (NOI). The NOI is then divided by the property price. This gives you the true rate of return based on the asset's performance.
How to Calculate Rental Yield
While our calculator above does the heavy lifting, it is important to understand the math behind the numbers.
In this example, while the gross yield looks very high (9%), the actual return after paying the bills is 6%. This is why calculating the Net Yield is essential for long-term success.
What is a "Good" Rental Yield?
There is no single answer, as acceptable yields vary by location and strategy. However, general benchmarks include:
Gross Yield: Investors often look for 8-10% or higher, though in high-appreciation areas, 5-6% may be acceptable.
Net Yield: A net yield (or Cap Rate) between 5% and 8% is typically considered solid for residential properties. Anything above 8% is often considered excellent cash flow, though it may come with higher risks (e.g., older properties or less desirable neighborhoods).
Factors Affecting Your Yield
Remember to input accurate estimates for Vacancy Rates and Maintenance. A common mistake is assuming 100% occupancy. Most investors factor in a 5% to 8% vacancy rate (about 2-4 weeks of emptiness per year) and budget 1% of the property value annually for maintenance repairs.