Rental Yield Calculator
Calculate your property investment ROI quickly and accurately.
Annual Rental Income: $0
Annual Cash Flow (Net): $0
Understanding Rental Yield for Real Estate Investment
Rental yield is a crucial metric for any property investor. It represents the percentage return you can expect to earn on a property investment through rental income. This calculation helps you compare different properties and determine if a potential investment meets your financial goals.
Gross vs. Net Rental Yield
While both metrics are important, they serve different purposes:
- Gross Rental Yield: This is the total annual rent divided by the property's purchase price. It provides a quick snapshot but doesn't account for the costs of running the property.
- Net Rental Yield: This is a more accurate measure of profitability. It subtracts all annual operating expenses (management fees, maintenance, insurance, property taxes) from the annual rent before dividing by the purchase price.
How to Use the Calculator: A Real-World Example
Imagine you are looking at a condo priced at $350,000. You estimate it can rent for $1,800 per month. Your annual expenses (taxes, insurance, and HOA fees) total $4,200.
| Metric | Value |
|---|---|
| Annual Rent (12 x $1,800) | $21,600 |
| Gross Yield ($21,600 / $350,000) | 6.17% |
| Net Income ($21,600 – $4,200) | $17,400 |
| Net Yield ($17,400 / $350,000) | 4.97% |
What is a Good Rental Yield?
A "good" yield varies significantly by location and property type. Generally, in stable urban markets, a net yield of 4-6% is considered solid. In high-growth or emerging areas, investors often accept lower yields (2-3%) in exchange for higher expected capital appreciation (the increase in property value over time).