Rental Property Yield Calculator
Calculate Gross Yield, Net Yield, and Cash Flow for your investment property.
Understanding Rental Yield
Rental yield is one of the most critical metrics for real estate investors. It measures the return on income generated by your property relative to the purchase price. Understanding the difference between Gross Yield and Net Yield is essential for making informed investment decisions.
Gross Rental Yield vs. Net Rental Yield
Gross Rental Yield is the simplest calculation. It takes your total annual rental income and divides it by the property's purchase price. While useful for a quick snapshot, it does not account for the costs associated with owning the property.
Net Rental Yield provides a much more accurate picture of your Return on Investment (ROI). It subtracts all operating expenses—such as insurance, taxes, HOA fees, maintenance, and vacancy losses—from your rental income before dividing by the purchase price. This figure is often synonymous with the Capitalization Rate (Cap Rate) in cash purchases.
What is a Good Rental Yield?
There is no one-size-fits-all answer, as "good" yield varies by location and strategy:
- 3-5%: Common in high-appreciation areas (like major city centers) where the primary goal is long-term value growth rather than immediate cash flow.
- 5-8%: Generally considered a solid return for residential buy-to-let properties in stable markets.
- 8%+: often found in lower-cost areas or multi-family units, offering excellent cash flow but potentially higher risk or lower capital appreciation.
How to Improve Your Yield
To maximize your rental yield, you can either increase income or decrease expenses. Strategies include renovating to justify higher rent, minimizing vacancy periods through better tenant retention, creating additional revenue streams (like parking or storage fees), and shopping around for better insurance rates.