What Is a Rental Yield Calculator?
A rental yield calculator computes the annual return on a rental property investment as a percentage. It helps real estate investors compare different properties and assess whether a potential purchase will generate satisfactory income relative to its cost.
How to Use This Rental Yield Calculator
- Enter the property purchase price (or current market value).
- Enter the monthly rent amount and annual operating expenses (e.g., maintenance, insurance, taxes).
- Click “Calculate” to see gross yield, net yield, and the calculated annual rent.
Key Concepts
Gross yield is (Annual Rent ÷ Property Price) × 100%, while net yield subtracts expenses like maintenance, insurance, property taxes, and vacancy costs. A gross yield of 5%–8% is commonly targeted by investors. Net yield provides a more realistic picture of actual returns and is typically 1%–3% lower than gross yield.
Gross Yield = (Annual Rent ÷ Property Price) × 100
Net Yield = ((Annual Rent − Expenses) ÷ Property Price) × 100
Frequently Asked Questions
What is the difference between gross and net rental yield?
Gross yield uses total rental income before expenses, while net yield deducts operating costs such as maintenance, management fees, insurance, and property taxes. Net yield gives a truer measure of profitability.
What is a good rental yield?
This varies by market, but generally a gross yield of 5%–8% is considered attractive. In expensive cities, yields may be lower (3%–4%) but offer stronger capital appreciation. Investors should balance yield against growth potential.
Should I factor in mortgage payments?
Mortgage payments are a financing cost, not an operating expense, so they are excluded from standard yield calculations. However, cash-on-cash return (factoring in leverage) is another important metric for financed purchases.