Investing in real estate requires more than just looking at the purchase price. To determine if a property is a "good deal," savvy investors use metrics like Gross Yield, Cap Rate (Net Yield), and Monthly Cash Flow. This calculator helps you strip away the guesswork by factoring in the hidden costs of property ownership.
1. Gross Rental Yield
Gross yield is the simplest calculation in real estate. It is the annual rent divided by the total purchase price. While it's a good "rule of thumb" for quickly scanning properties, it doesn't account for expenses like taxes, repairs, or insurance.
Formula: (Annual Rent / Purchase Price) x 100
2. Net Yield (Cap Rate)
The Capitalization Rate (Cap Rate) is the most accurate measure of a property's profitability. It uses the Net Operating Income (NOI), which is the income remaining after all operating expenses (taxes, insurance, maintenance, vacancy) are paid, but before any mortgage payments.
A higher Cap Rate typically indicates a better return, but often comes with higher risk (such as location or property condition).
Cash flow is the actual money that lands in your bank account every month. Even a property with a high yield can have negative cash flow if the mortgage payment is too high or if the investor fails to set aside money for the inevitable 10% maintenance or 5% vacancy rate. Successful investors always budget for "CapEx" (Capital Expenditures) to ensure they aren't surprised by a roof replacement or a broken HVAC system.
function calculateRentalYield() {
// Inputs
var price = parseFloat(document.getElementById('propPrice').value) || 0;
var closing = parseFloat(document.getElementById('closingCosts').value) || 0;
var rent = parseFloat(document.getElementById('monthlyRent').value) || 0;
var tax = parseFloat(document.getElementById('monthlyTax').value) || 0;
var ins = parseFloat(document.getElementById('monthlyIns').value) || 0;
var maint = parseFloat(document.getElementById('maintPerc').value) || 0;
var vacancy = parseFloat(document.getElementById('vacancyRate').value) || 0;
var mgmt = parseFloat(document.getElementById('mgmtFee').value) || 0;
// Totals
var totalInvestment = price + closing;
var annualGrossRent = rent * 12;
// Expense Calculations
var vacancyLoss = annualGrossRent * (vacancy / 100);
var managementCost = annualGrossRent * (mgmt / 100);
var maintenanceCost = annualGrossRent * (maint / 100);
var fixedExpenses = (tax * 12) + (ins * 12);
var totalAnnualExpenses = vacancyLoss + managementCost + maintenanceCost + fixedExpenses;
var netOperatingIncome = annualGrossRent – totalAnnualExpenses;
// Ratios
var grossYield = (annualGrossRent / totalInvestment) * 100;
var capRate = (netOperatingIncome / totalInvestment) * 100;
var monthlyCashFlow = netOperatingIncome / 12;
// Display Results
document.getElementById('results').style.display = 'block';
document.getElementById('resTotalInv').innerText = '$' + totalInvestment.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
if (totalInvestment > 0) {
document.getElementById('resGrossYield').innerText = grossYield.toFixed(2) + '%';
document.getElementById('resCapRate').innerText = capRate.toFixed(2) + '%';
} else {
document.getElementById('resGrossYield').innerText = '0.00%';
document.getElementById('resCapRate').innerText = '0.00%';
}
document.getElementById('resAnnualNOI').innerText = '$' + netOperatingIncome.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('resMonthlyCash').innerText = '$' + monthlyCashFlow.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
// Color logic for cash flow
if (monthlyCashFlow < 0) {
document.getElementById('resMonthlyCash').style.color = '#e74c3c';
} else {
document.getElementById('resMonthlyCash').style.color = '#27ae60';
}
}