Rental yield calculator
Find the gross and net rental yield of a property: the rent it earns each year as a share of what it costs. Enter the price, your purchase costs, the rent and the operating expenses.
Your results
EstimateGross rental yield: 9.60%
- Net rental yield
- 6.00%
- Annual rent
- $24,000.00
- Net operating income (annual)
- $15,600.00
- Total cost
- $260,000.00
- Monthly rent as a share of price
- 0.80%
Results are estimates for planning only. They are not legal, tax or investment advice, and they apply no state or local rules. Check your lease, your local laws and a qualified professional before you rely on a number.
How rental yield is calculated
Gross yield = annual rent / purchase price. Net yield = net operating income / (purchase price + purchase costs)
Gross rental yield is a full year of scheduled rent divided by the price. It is quick to work out from a listing, which makes it useful for sorting many properties, and it ignores vacancy and every cost of running the property.
Net rental yield starts from net operating income (NOI): the rent you expect to collect after vacancy, minus operating expenses such as property taxes, insurance, repairs, management and owner-paid utilities. It divides NOI by the total cost to buy, so closing costs and repairs before the first tenant count too. Mortgage payments stay out, so the result is the same whether you buy with cash or a loan.
The calculator also shows one month's rent as a share of the price. Some investors use that figure as a first screen and call it the 1% rule. It is a rule of thumb that leaves out expenses, so check the net yield before you rely on it.
Worked example
A $250,000 single-family rental costs another $10,000 in closing costs and repairs. It rents for $2,000 a month, you plan for 5% vacancy, and operating expenses come to $7,200 a year.
- Annual rent: $2,000 x 12 = $24,000.
- Gross yield: $24,000 / $250,000 = 0.096.
- Vacancy: $24,000 x 5% = $1,200, so the rent you expect to collect is $22,800.
- NOI: $22,800 - $7,200 = $15,600.
- Total cost: $250,000 + $10,000 = $260,000.
- Net yield: $15,600 / $260,000 = 0.06.
The gross rental yield is 9.60% and the net rental yield is 6.00%.
Frequently asked questions
What is rental yield?
Rental yield is the rent a property earns in a year as a percentage of what it cost. Gross yield uses the full rent and the price. Net yield uses the income left after vacancy and operating expenses, and the price plus purchase costs.
What is the difference between gross and net rental yield?
Gross yield leaves out vacancy and expenses, so it is always the higher number. In the example above, the gross yield is 9.60% and the net yield is 6.00%, because $1,200 of vacancy, $7,200 of expenses and $10,000 of purchase costs come into the net figure.
What is a good rental yield?
It depends on the market, the property type and how much risk you accept. Yields differ from city to city and change over time, so compare a property against similar rentals nearby and against your own costs of owning it.
Is net rental yield the same as cap rate?
They are close. Cap rate divides NOI by the property's value or price. Net yield here divides NOI by the price plus purchase costs, so it is a little lower. Enter 0 for purchase costs and the two match.
Does rental yield include the mortgage?
No. Rental yield leaves financing out so properties compare on the same footing. To see the return on the cash you put in after loan payments, use the cash on cash return calculator.
Your real yield, from your bank feed
KeyRing pulls transactions from your bank feed and matches rent and expenses to each property, with suggestions you confirm, so your yield starts from what you actually collected and spent. Your first subscription starts with a 14-day free trial.