Rental Yield Calculator
Calculate Gross and Net Rental Yield for Real Estate Investments
Understanding Rental Yield
Rental yield is one of the most critical metrics for real estate investors. It measures the return on income generated by a property as a percentage of its purchase price or market value. 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 a quick calculation that looks at total rental income relative to the property price, ignoring expenses. It is useful for quickly filtering potential properties.
- Formula: (Annual Rental Income / Property Value) × 100
Net Rental Yield (often referred to as the Capitalization Rate or Cap Rate if purchased in cash) provides a more accurate picture of profitability by factoring in operating costs such as taxes, insurance, HOA fees, and maintenance.
- Formula: ((Annual Rental Income – Annual Operating Expenses) / Property Value) × 100
What is a Good Rental Yield?
While "good" is subjective and depends on location and strategy, many investors target a Gross Yield of 8-10% or higher. A Net Yield of 5-8% is generally considered healthy in many stable markets. Properties in high-appreciation areas may have lower yields, while properties in lower-cost areas often require higher yields to offset risk.
Using This Calculator
Input your property's purchase price and expected monthly rent to get the Gross Yield. To determine the Net Yield, be sure to estimate your annual expenses accurately, including property taxes, insurance, and maintenance reserves. This tool assumes a cash purchase calculation; financing costs are not deducted from the Net Yield figure shown here.