Property Rental Yield & ROI Calculator
Calculate your potential real estate investment returns with precision.
How to Use the Rental Yield Calculator
Understanding the profitability of a rental property is the difference between a successful wealth-building strategy and a financial drain. This calculator helps real estate investors determine the Net Operating Income (NOI) and the Cash-on-Cash Return of a potential acquisition.
Key Real Estate Metrics Explained
1. Gross Rental Yield
Gross yield is the simplest calculation. It is your total annual rent divided by the purchase price of the property. While it's a good "quick check" metric, it ignores the costs of running the property, which can vary significantly between older and newer buildings.
2. Net Operating Income (NOI)
NOI is the actual cash left in your pocket after all operating expenses (property taxes, insurance, maintenance, and property management fees) have been paid, but before debt service (mortgage payments). This is the truest measure of a property's income-producing potential.
3. Cash-on-Cash ROI
This metric measures the annual return you receive on the actual cash you invested. In our calculator, we include closing costs and repairs in the total investment to give you a realistic ROI figure. If you are buying with cash, your ROI and Net Yield will be very similar.
Example Calculation
Imagine you buy a condo for $200,000. You spend $10,000 on closing costs and new flooring. Your total investment is $210,000.
- Monthly Rent: $1,800 ($21,600/year)
- Monthly Expenses: $500 ($6,000/year)
- Annual NOI: $15,600
- Net Yield: 7.8%
- Cash ROI: 7.42%
By using this calculator, you can quickly compare multiple properties and decide which one fits your investment criteria best.