Rental Yield Calculator -- Gross & Net Yield

Calculate Rental Yield

This rental yield calculator computes gross and net rental yield from a property's value and rental income. Enter your numbers below — all calculations run in your browser.

What Is Rental Yield?

Rental yield is the annual rental income from a property expressed as a percentage of the property's purchase price or current market value. It is the standard metric for comparing how much income different investment properties generate relative to their cost.

There are two types:

• Gross rental yield — uses total rental income before any expenses are deducted
• Net rental yield — subtracts annual operating expenses from rental income before dividing by property value

Gross yield is useful for quick comparisons across properties and markets. Net yield gives a more realistic picture of actual cash flow.

How to Calculate Rental Yield

Gross Rental Yield

Take the total rent collected in one year, divide by the property's value, and multiply by 100 to get a percentage.

Net Rental Yield

Subtract all annual operating costs from the rent before dividing. Operating expenses typically include property tax, insurance, maintenance, property management fees, and a vacancy allowance.

Note: Net yield does not include mortgage payments. Mortgage costs are financing decisions, not property operating costs. This keeps the metric comparable across properties regardless of how they are financed.

Worked Examples

What Is a Good Rental Yield?

Yield benchmarks vary by location and property type, but these general ranges are widely used:

• Below 3% gross: Poor — likely negative cash flow after expenses
• 3–5% gross: Average — typical in high-demand urban markets where appreciation compensates for lower income
• 5–7% gross: Good — solid cash flow potential for most landlords
• 7–10% gross: Very good — strong income-producing property
• Above 10% gross: Excellent — verify the numbers are sustainable (high yields can signal higher risk, vacancy, or declining areas)

Important: Yield is one metric, not the whole picture. A 10% yield means little if the property is vacant half the year or needs $20,000 in repairs. Always consider the full expense picture and local market conditions.

Rental Yield vs. Cap Rate vs. ROI

These three metrics are related but measure different things:

• Gross rental yield = Annual rent ÷ Property value. Quick comparison metric. Does not account for expenses.
• Net rental yield (or cap rate) = (Annual rent − Expenses) ÷ Property value. More realistic. "Cap rate" is the term used more in commercial real estate; "net yield" is more common in residential contexts, but the formula is essentially the same.
• Return on investment (ROI) = Annual net income ÷ Your actual cash invested. Because most properties are bought with a mortgage, your cash invested (down payment + closing costs) is much less than the property value, so ROI on cash is typically higher than the yield percentage.

Use yield to compare properties on a like-for-like basis. Use ROI to understand the return on your actual money.

What Expenses to Include

For an accurate net yield, include all recurring costs that come out of your rental income:

• Property tax: Varies by location. Check your local assessment or tax bill.
• Landlord insurance: Covers the structure, liability, and sometimes loss of rent. Not the same as homeowner's insurance.
• Maintenance and repairs: A common rule of thumb is 1–2% of property value per year. Older properties tend toward the higher end.
• Property management: If you hire a manager, expect 8–12% of gross rent. If you self-manage, your time still has a cost, but it won't appear in the numbers.
• Vacancy allowance: No property is rented 365 days a year. Budget 5–10% of annual rent for turnover gaps.
• HOA / condo fees: Monthly or quarterly fees charged by the homeowners association, if applicable.
• Other: Accounting, legal, advertising for tenants, pest control, etc.

What to exclude: Mortgage payments (principal + interest) are financing costs, not operating costs. Including them would make the metric depend on your loan terms, making it impossible to compare properties fairly.

Common Mistakes

• Using purchase price when you mean current value (or vice versa): Gross yield can be calculated against either, but be consistent. Using purchase price shows your original deal; using current value shows today's return.
• Forgetting vacancy: Assuming 12 months of rent when realistic occupancy is 11 or 11.5 months inflates the yield by 4–8%.
• Ignoring maintenance on older properties: A property built in 1960 will not have the same maintenance costs as one built in 2020.
• Comparing gross yields across different expense environments: A 7% gross yield in one market may net 5% after expenses, while 7% in another market may net only 3% due to higher taxes and insurance.
• Confusing yield with total return: Yield only measures income. Total return includes property value appreciation (or depreciation), which can dwarf the rental income in some markets.

Frequently Asked Questions

What is rental yield?

Rental yield is the annual rental income from a property expressed as a percentage of the property's value. It measures how much income a property generates relative to its price. Gross yield uses total rent; net yield subtracts operating expenses first.

How do you calculate gross rental yield?

Gross rental yield = (Annual Rental Income ÷ Property Value) × 100. For example, a $300,000 property renting at $2,000/month earns $24,000/year, giving a gross yield of 8.0%.

How do you calculate net rental yield?

Net rental yield = ((Annual Rental Income − Annual Operating Expenses) ÷ Property Value) × 100. Include property tax, insurance, maintenance, management fees, and a vacancy allowance as operating expenses.

What is a good rental yield?

It depends on the market, but generally: below 3% is poor, 3–5% is average, 5–7% is good, 7–10% is very good, and above 10% is excellent. These are gross yield figures — net yields will be 1–3 percentage points lower.

What is the difference between gross and net rental yield?

Gross yield divides total annual rent by property value. Net yield subtracts operating expenses (property tax, insurance, maintenance, management, vacancy) from the rent before dividing. Net yield is a more accurate measure of real returns.

Is rental yield the same as ROI?

No. Rental yield measures income relative to the full property value. ROI measures return relative to your actual cash invested — typically the down payment and closing costs. Because most properties are leveraged with a mortgage, ROI on cash invested is usually higher than the rental yield percentage.

How does rental yield differ from cap rate?

Cap rate (capitalization rate) and net rental yield use essentially the same formula: net operating income divided by property value. "Cap rate" is the standard term in commercial real estate; "net rental yield" is more common in residential contexts. Neither includes mortgage payments.

Should I include mortgage payments in net yield?

No. Mortgage payments are financing costs, not operating costs. Including them would make the metric depend on your loan terms and prevent meaningful comparisons between properties. Use ROI or cash-on-cash return if you want to account for financing.

Does this tool send my data to a server?

No. All calculations happen in your browser using JavaScript. Nothing is transmitted, stored, or logged.

Related Tools

• Cap Rate Calculator — calculate capitalization rate for commercial and residential properties
• ROI Calculator — calculate return on investment for any asset
• Mortgage Calculator — estimate monthly mortgage payments and total interest
• Compound Interest Calculator — see how invested returns grow over time
• Rental Yield Explained — in-depth guide to gross vs. net yield, benchmarks, and what affects returns

Privacy & Limitations

• Client-side only. No data is sent to any server. No cookies, no tracking.
• Not financial advice. This calculator provides general educational estimates. Actual returns depend on market conditions, tenant quality, maintenance costs, and many other factors. Consult a qualified professional before making investment decisions.
• Currency-neutral. Values are displayed with a dollar sign by default, but the math works for any currency — just enter consistent values.
• Does not model financing. Mortgage payments, interest, and loan-to-value ratios are not included. Use a mortgage calculator for that.

Rental Yield Calculator FAQ