Rental Property Yield Calculator
Investment Analysis
Gross Rental Yield:
Net Rental Yield:
Annual Cash Flow:
Total Investment:
Understanding Rental Property Yield
Whether you are a seasoned real estate investor or a first-time landlord, calculating the Rental Yield is the most critical step in evaluating a property's income potential. Rental yield measures the percentage return on your investment based on the income generated by the property.
Gross Yield vs. Net Yield
Our calculator provides two distinct metrics to give you a full picture of your investment:
- Gross Rental Yield: This is the total annual rent divided by the property purchase price. It is a quick way to compare different properties before accounting for expenses.
- Net Rental Yield: This is a more accurate figure. It takes the annual rent, subtracts all operating expenses (property taxes, insurance, maintenance, management fees), and divides it by the total investment (purchase price plus closing costs).
How to Use the Rental Yield Calculator
To get the most accurate results, follow these steps:
- Property Price: Enter the negotiated purchase price of the home.
- Closing Costs: Include stamp duty, legal fees, inspection costs, and immediate renovation needs.
- Monthly Rent: Enter the realistic market rent you expect to receive monthly.
- Annual Expenses: Sum up your yearly property taxes, insurance premiums, HOA fees, and a 5-10% buffer for maintenance.
Real-World Example Calculation
Imagine you buy a condo for $250,000 with $10,000 in closing costs. You rent it out for $1,800 per month. Your annual expenses (tax, insurance, repairs) total $4,500.
- Annual Rent: $21,600
- Total Investment: $260,000
- Gross Yield: ($21,600 / $250,000) = 8.64%
- Net Yield: ($21,600 – $4,500) / $260,000 = 6.58%
Generally, a net yield between 5% and 8% is considered a solid performance for residential real estate, though this varies significantly by local market conditions.