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Rental Yield Calculator

(Taxes, insurance, maintenance, management fees, etc.)

Investment Summary

Gross Rental Yield:

Net Rental Yield:

Annual Income (Gross):

Annual Cash Flow (Net):

function calculateRentalYield() { var price = parseFloat(document.getElementById('propertyPrice').value); var rent = parseFloat(document.getElementById('monthlyRent').value); var expenses = parseFloat(document.getElementById('annualExpenses').value); if (isNaN(price) || isNaN(rent) || price <= 0) { alert("Please enter valid positive numbers for price and rent."); return; } if (isNaN(expenses)) { expenses = 0; } var annualGrossRent = rent * 12; var annualNetRent = annualGrossRent – expenses; var grossYield = (annualGrossRent / price) * 100; var netYield = (annualNetRent / price) * 100; document.getElementById('grossYieldResult').innerText = grossYield.toFixed(2) + "%"; document.getElementById('netYieldResult').innerText = netYield.toFixed(2) + "%"; document.getElementById('annualGrossResult').innerText = "$" + annualGrossRent.toLocaleString(); document.getElementById('annualNetResult').innerText = "$" + annualNetRent.toLocaleString(); document.getElementById('yieldResults').style.display = 'block'; }

Understanding Rental Yield: A Guide for Real Estate Investors

Rental yield is one of the most critical metrics for real estate investors. It measures the annual return on a property investment, expressed as a percentage of the property's value. Unlike capital gains, which focus on the increase in property value over time, rental yield focuses on the immediate income generated by the asset.

Gross Yield vs. Net Yield: What's the Difference?

When using a rental yield calculator, it is vital to distinguish between gross and net figures. While gross yield provides a quick "snapshot," net yield offers a realistic view of your actual profit.

  • Gross Rental Yield: This is calculated before any expenses are deducted. It is the annual rent divided by the purchase price. For example, if you buy a property for $400,000 and rent it for $2,000 a month ($24,000/year), your gross yield is 6%.
  • Net Rental Yield: This factor in all operating costs, including property taxes, insurance, maintenance, and vacancy rates. If that same property has $5,000 in annual expenses, your net income is $19,000, resulting in a net yield of 4.75%.

How to Use This Calculator

To get the most accurate results from our tool, follow these steps:

  1. Enter the Purchase Price: Include the total cost of the property, including closing costs or renovation budgets if you want a true ROI.
  2. Input Monthly Rent: Research local market comparables to ensure your expected rent is realistic for the area.
  3. Subtract Expenses: Don't forget often-overlooked costs like HOA fees, property management (usually 8-10% of rent), and a "sinking fund" for future repairs.

What is a "Good" Rental Yield?

A "good" yield varies significantly based on location and property type. Generally, in stable urban markets, a gross yield of 5-8% is considered healthy. In higher-risk areas or student housing markets, investors often look for 8-12% to compensate for higher maintenance or turnover rates. Always compare the net yield against other investment vehicles, such as dividend stocks or high-yield savings accounts, to ensure your real estate venture is providing adequate compensation for the effort of management.

Calculation Formulas

Metric Formula
Gross Yield (Annual Rent / Purchase Price) x 100
Net Yield ((Annual Rent – Expenses) / Purchase Price) x 100

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