Calculate your gross and net investment returns on rental property.
Gross Annual Rent:
Gross Rental Yield:
Net Annual Income (Cash Flow):
Net Rental Yield:
Understanding Rental Yield for Real Estate Investing
Rental yield is one of the most important metrics used by real estate investors to evaluate the potential return on a residential or commercial property. It measures the annual rental income generated by a property as a percentage of its total value or purchase price.
Gross Yield vs. Net Yield
It is vital to distinguish between gross and net yield to avoid making poor investment choices:
Gross Rental Yield: This is the simplest calculation. It takes the total annual rent and divides it by the purchase price. It does not account for any expenses.
Net Rental Yield: This is a more accurate representation of your profit. It subtracts annual operating expenses (management fees, maintenance, taxes, insurance, and vacancies) from the annual rent before dividing by the property price.
Investment Example:
Suppose you buy a property for $350,000. You rent it out for $1,800 per month. Your annual expenses total $4,500.
– Gross Annual Rent: $21,600
– Gross Yield: 6.17%
– Annual Net Income: $17,100
– Net Yield: 4.89%
What is a "Good" Rental Yield?
A "good" yield varies significantly by location. In high-growth metropolitan areas (like NYC or London), yields might be lower (3-5%) because investors bank on property appreciation. In regional or secondary markets, investors often look for higher yields (7-10%) to compensate for slower value growth.
Tips to Improve Your Yield
Reduce Vacancy Rates: High turnover is the biggest yield killer. Screen for long-term tenants.
Regular Maintenance: Preventing major repairs through small checkups keeps annual expenses predictable.
Value-Add Renovations: Updating kitchens or bathrooms can allow for significant rent increases relative to the cost of the renovation.
function calculateRentalYield() {
var price = parseFloat(document.getElementById('purchasePrice').value);
var monthly = parseFloat(document.getElementById('monthlyRent').value);
var expenses = parseFloat(document.getElementById('annualExpenses').value);
// Validation
if (isNaN(price) || price <= 0 || isNaN(monthly) || monthly < 0) {
alert("Please enter valid positive numbers for price and rent.");
return;
}
if (isNaN(expenses)) {
expenses = 0;
}
var annualRent = monthly * 12;
var grossYield = (annualRent / price) * 100;
var netIncome = annualRent – expenses;
var netYield = (netIncome / price) * 100;
// Display values
document.getElementById('grossAnnualRent').innerHTML = "$" + annualRent.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('grossYield').innerHTML = grossYield.toFixed(2) + "%";
document.getElementById('netAnnualIncome').innerHTML = "$" + netIncome.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('netYield').innerHTML = netYield.toFixed(2) + "%";
// Show result box
document.getElementById('results').style.display = 'block';
}