Rental Property ROI & Yield Calculator
Calculate your real estate investment potential in seconds.
Understanding Rental Property ROI and Yield
Investing in real estate is one of the most proven ways to build long-term wealth. However, to ensure a property is a "good deal," you must look beyond the purchase price. Professional investors use two primary metrics: Gross Yield and Net Yield (Cap Rate).
What is Gross Rental Yield?
Gross Rental Yield is the total yearly rent divided by the property purchase price. It provides a quick snapshot of the property's income potential before considering any expenses like taxes, maintenance, or property management fees.
What is Net Yield (Cap Rate)?
Net Yield, often referred to as the Capitalization Rate (Cap Rate), is a more accurate measure of profitability. It takes the total annual income and subtracts all operating expenses. This tells you the actual return you are getting on the capital invested.
Realistic Calculation Example:
Property Price: $400,000
Monthly Rent: $2,500 ($30,000 annually)
Annual Expenses: $6,000 (Property tax, insurance, HOA)
Gross Yield: ($30,000 / $400,000) = 7.5%
Net Yield: ($24,000 / $400,000) = 6.0%
Why These Metrics Matter for SEO and Investing
When searching for "Rental Yield Calculator" or "Real Estate ROI," investors are looking for efficiency. High-yield properties often come with higher risks or lower appreciation potential, while low-yield properties in prime locations might offer better long-term equity growth. Using this tool allows you to compare different markets (e.g., Suburban vs. Urban) to see where your cash works hardest.
Key Factors That Impact Your ROI:
- Vacancy Rates: Properties that sit empty lose money quickly.
- Property Management: Usually costs 8-12% of the monthly rent.
- Maintenance Reserve: Wise investors set aside 1% of the property value annually for repairs.
- Financing: If you have a mortgage, your "Cash-on-Cash Return" will differ from the Cap Rate.