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Investment Property Yield Calculator

Investment Summary

Annual Gross Income: $0
Annual Operating Costs: $0
Annual Cash Flow: $0
Gross Yield
0%
Net Yield
0%
function calculatePropertyYield() { var purchasePrice = parseFloat(document.getElementById('purchasePrice').value); var monthlyRent = parseFloat(document.getElementById('monthlyRent').value); var monthlyExpenses = parseFloat(document.getElementById('monthlyExpenses').value); var vacancyRate = parseFloat(document.getElementById('vacancyRate').value); if (isNaN(purchasePrice) || isNaN(monthlyRent) || purchasePrice <= 0) { alert('Please enter valid numerical values for purchase price and rent.'); return; } var annualGrossIncome = monthlyRent * 12; var vacancyLoss = annualGrossIncome * (vacancyRate / 100); var annualExpenses = (monthlyExpenses * 12) + vacancyLoss; var annualNetIncome = annualGrossIncome – annualExpenses; var grossYield = (annualGrossIncome / purchasePrice) * 100; var netYield = (annualNetIncome / purchasePrice) * 100; document.getElementById('resGrossIncome').innerText = '$' + annualGrossIncome.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('resCosts').innerText = '$' + annualExpenses.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('resCashFlow').innerText = '$' + annualNetIncome.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('resGrossYield').innerText = grossYield.toFixed(2) + '%'; document.getElementById('resNetYield').innerText = netYield.toFixed(2) + '%'; document.getElementById('yieldResults').style.display = 'block'; }

Understanding Investment Property Yield

For real estate investors, calculating the "yield" is the most fundamental way to determine if a property is a sound financial investment. Unlike simple capital gains, yield focuses on the income generated by the asset relative to its cost.

Gross Yield vs. Net Yield

Gross Yield is a simple calculation that compares the annual rental income to the purchase price. It is a great "quick check" metric but can be misleading because it ignores taxes, maintenance, and insurance.

Net Yield is the more accurate figure. It subtracts all operating expenses—including property management fees, repairs, insurance, and vacancy periods—before calculating the percentage return. A property with a high gross yield but massive maintenance costs may actually have a poor net yield.

How to Use This Calculator

  • Purchase Price: Enter the total amount paid for the property, including closing costs.
  • Monthly Rent: The expected gross rental income from tenants.
  • Monthly Expenses: Include HOA fees, property taxes (divided by 12), insurance, and a small buffer for repairs.
  • Vacancy Rate: Most professionals use 5-8% to account for the time between tenants.

Example Calculation

Suppose you purchase a condo for $300,000. You rent it out for $2,000 per month. Your annual gross income is $24,000, giving you a Gross Yield of 8%.

However, after paying $400/month in HOA/Taxes and accounting for a 5% vacancy ($1,200/year), your actual annual net income is $18,000. This results in a Net Yield of 6%. Knowing this number allows you to compare the property against other investments like stocks or bonds.

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