Calculate Gross and Net ROI for Real Estate Investments
Gross Rental Yield:0.00%
Net Rental Yield:0.00%
Annual Net Cash Flow:$0.00
How to Calculate Rental Yield
Rental yield is a critical metric for real estate investors used to evaluate the potential return on a property. It is expressed as a percentage and helps compare different investment opportunities.
The Formulas
Gross Yield: (Annual Rental Income / Purchase Price) x 100
Net Yield: ((Annual Rental Income – Annual Expenses) / Purchase Price) x 100
Why Net Yield Matters
While Gross Yield is a quick way to screen properties, Net Yield provides a more realistic picture of your profitability. It accounts for the "hidden" costs of ownership such as property taxes, landlord insurance, maintenance reserves, and property management fees.
Example Calculation
Suppose you buy a property for $250,000 and rent it out for $1,800 per month ($21,600/year). Your annual taxes and insurance total $4,000.
Gross Yield: ($21,600 / $250,000) = 8.64%
Net Yield: (($21,600 – $4,000) / $250,000) = 7.04%
A "good" rental yield typically falls between 5% and 8% in most stable markets, though this varies significantly by location and property type.
function calculateRentalYield() {
var purchasePrice = parseFloat(document.getElementById('purchasePrice').value);
var monthlyRent = parseFloat(document.getElementById('monthlyRent').value);
var annualTax = parseFloat(document.getElementById('annualTax').value) || 0;
var annualInsurance = parseFloat(document.getElementById('annualInsurance').value) || 0;
if (isNaN(purchasePrice) || isNaN(monthlyRent) || purchasePrice <= 0) {
alert("Please enter valid numbers for Purchase Price and Monthly Rent.");
return;
}
var annualRent = monthlyRent * 12;
var totalExpenses = annualTax + annualInsurance;
var netIncome = annualRent – totalExpenses;
var grossYield = (annualRent / purchasePrice) * 100;
var netYield = (netIncome / purchasePrice) * 100;
document.getElementById('grossResult').innerText = grossYield.toFixed(2) + "%";
document.getElementById('netResult').innerText = netYield.toFixed(2) + "%";
document.getElementById('cashFlowResult').innerText = "$" + netIncome.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('resultsArea').style.display = 'block';
}