function calculateRentalROI() {
var price = parseFloat(document.getElementById('propPrice').value);
var renov = parseFloat(document.getElementById('renovCost').value);
var rent = parseFloat(document.getElementById('monthlyRent').value);
var expenses = parseFloat(document.getElementById('annualExp').value);
if (isNaN(price) || isNaN(rent) || price <= 0) {
alert("Please enter valid numbers for Property Price and Rent.");
return;
}
var totalInvestment = price + renov;
var annualGrossRent = rent * 12;
var annualNetCashFlow = annualGrossRent – expenses;
var grossYield = (annualGrossRent / price) * 100;
var netYield = (annualNetCashFlow / totalInvestment) * 100;
document.getElementById('totalInvested').innerText = "$" + totalInvestment.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('annualGross').innerText = "$" + annualGrossRent.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('annualNet').innerText = "$" + annualNetCashFlow.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('grossYield').innerText = grossYield.toFixed(2) + "%";
document.getElementById('netYield').innerText = netYield.toFixed(2) + "%";
document.getElementById('resultsContainer').style.display = 'block';
}
Understanding Rental Property Yield: A Guide for Real Estate Investors
When investing in real estate, calculating your potential return on investment (ROI) is the difference between a profitable venture and a costly mistake. Our Rental Property Yield Calculator helps you determine two critical metrics: Gross Yield and Net Yield.
What is Gross Rental Yield?
Gross rental yield is the simplest way to measure a property's income potential. It is calculated by taking the total annual rent and dividing it by the purchase price of the property. While it provides a quick "snapshot" of the investment, it does not account for the costs of running the property.
Formula: (Annual Rent / Purchase Price) x 100
What is Net Rental Yield (ROI)?
Net yield is a much more accurate representation of your actual profit. It takes into account the total cost of the investment (including renovations) and subtracts all operating expenses such as property taxes, insurance, management fees, and maintenance. If you want to know how much cash will actually stay in your pocket, net yield is the metric to watch.
Imagine you purchase a condo for $250,000. You spend $10,000 on new flooring and paint. You rent the unit for $2,000 per month, and your annual expenses (tax, insurance, and HOA) total $5,000.
Total Investment: $260,000
Annual Rent: $24,000
Gross Yield: 9.6% ($24,000 / $250,000)
Net Yield: 7.31% (($24,000 – $5,000) / $260,000)
Key Factors Impacting Your ROI
To maximize your rental yield, you must focus on three main areas:
Location: High-demand areas often have lower yields because property prices are high, but they offer better long-term capital appreciation.
Expense Management: Keeping maintenance costs low and avoiding long vacancy periods is vital for maintaining a high net yield.
Financing: If you take out a mortgage, your "Cash-on-Cash" return will differ from the yield, as you are using leverage to control a larger asset with less initial capital.
How to Use This Calculator
Simply enter the purchase price and any immediate renovation costs. Input your estimated monthly rent based on local market comps. Finally, estimate your annual expenses. A common rule of thumb is to set aside 1% of the property value annually for repairs, plus actual costs for taxes and insurance. Click calculate to see if the property meets your investment criteria!