Rental Property Yield Calculator
Analyze the profitability of your real estate investment
Understanding Rental Yield for Real Estate Investors
When investing in property, calculating the "yield" is the most effective way to compare different opportunities. Rental yield measures the annual return on your investment as a percentage of the property's value.
Gross Yield vs. Net Yield
Gross Rental Yield is the simple calculation of your annual rent divided by the purchase price. For example, if you buy a house for $200,000 and rent it for $1,200 a month ($14,400 annually), your gross yield is 7.2%.
Net Rental Yield is a more accurate metric because it accounts for expenses like taxes, repairs, and management fees. This calculator subtracts your annual operating costs from your income to show what you actually keep in your pocket.
What is a Good Yield?
- 4% to 5%: Common in high-demand urban areas where property appreciation is the main goal.
- 6% to 8%: Generally considered a solid return for most residential investments.
- 10%+: Excellent yield, often found in emerging markets or specialized rental niches like student housing.
Realistic Investment Example
Imagine purchasing a condo for $250,000. You charge $1,800 in monthly rent. Your annual property tax is $3,000 and maintenance averages $1,500.
In this scenario, your Gross Yield would be 8.64%, but your Net Yield would be 6.84%. Always look at the net figure to ensure your mortgage and expenses don't exceed your income.