Rental Yield & ROI Calculator
Calculate your property investment returns instantly.
Understanding Rental Yield for Real Estate Investing
Rental yield is a fundamental metric used by property investors to determine the efficiency of an income-generating asset. Whether you are looking at your first buy-to-let or managing a large portfolio, knowing the difference between Gross and Net yield is critical for long-term success.
Gross Yield vs. Net Yield
Gross Rental Yield is the total yearly rent divided by the property price. It is a quick way to compare different properties but doesn't account for the costs of ownership.
Net Rental Yield is a more accurate figure. It takes your annual rent, subtracts all expenses (such as property management fees, repairs, insurance, and vacancy costs), and divides it by the total investment cost. This gives you a realistic view of the money actually staying in your pocket.
How to Use This Calculator
- Property Purchase Price: Enter the base cost of the property.
- Monthly Rent: Enter the expected or current rent you receive every month.
- Annual Expenses: Include property taxes, HOA fees, insurance, and a small fund for ongoing maintenance.
- Additional Buying Costs: Factor in closing costs, legal fees, or initial renovations needed to make the property tenant-ready.
Example Calculation
If you purchase a property for $200,000 with $5,000 in closing costs, your total investment is $205,000. If the monthly rent is $1,500 ($18,000/year) and annual expenses are $3,000:
- Gross Yield: ($18,000 / $200,000) * 100 = 9%
- Net Yield: (($18,000 – $3,000) / $205,000) * 100 = 7.31%
A "good" yield typically ranges between 5% and 8% depending on the location and property type. Always ensure your net yield covers your mortgage interest to maintain a positive cash flow.