Rental Yield Calculator
Calculate your investment property's profitability in seconds.
Gross Annual Income:
$0.00
Gross Rental Yield:
0.00%
Net Annual Income (Profit):
$0.00
Net Rental Yield:
0.00%
Understanding Rental Yield for Real Estate Investment
Whether you are a seasoned real estate investor or looking to purchase your first buy-to-let property, understanding rental yield is crucial. It is the primary metric used to measure the annual return on a property investment as a percentage of its cost.
Gross vs. Net Rental Yield: What's the Difference?
Our calculator provides two essential figures to help you evaluate your investment strategy:
- Gross Rental Yield: This is calculated by taking the total annual rent and dividing it by the property value. It is a quick way to compare different properties but doesn't account for running costs.
- Net Rental Yield: This is a more accurate measure of profitability. It subtracts all annual expenses (insurance, maintenance, property management fees, taxes) from the annual rent before dividing by the total investment cost (purchase price + closing costs).
How to Use This Calculator
To get an accurate calculation, follow these steps:
- Property Purchase Price: Enter the actual price paid for the property.
- Monthly Rent: Enter the total rent you expect to receive each month.
- Annual Expenses: Include everything—property taxes, landlord insurance, estimated repair costs (typically 1% of property value), and management fees.
- Closing Costs: Don't forget stamp duty, legal fees, and initial renovation costs as these affect your total capital outlay.
Example Calculation
If you purchase a property for $300,000 with $10,000 in closing costs, and rent it for $1,800 per month with $4,000 in annual expenses:
- Total Investment: $310,000
- Annual Rent: $21,600 ($1,800 x 12)
- Gross Yield: 6.97% ($21,600 / $310,000)
- Net Yield: 5.68% (($21,600 – $4,000) / $310,000)
What is a "Good" Rental Yield?
Generally, a "good" rental yield depends on the location. In stable urban markets, a yield of 4% to 6% is common. In emerging markets or higher-risk areas, investors often look for 7% to 10%. Remember that yield is only one part of the equation; you should also consider potential capital growth (property value appreciation) over time.