Real Estate Rental Yield Calculator

What is Rental Yield?

Rental yield is the most important metric a real estate investor uses to evaluate a property. It represents the percentage of return you make on the property's purchase price from rental income alone (excluding property appreciation).

Gross Yield vs. Net Yield

Gross Rental Yield only looks at the total rent collected divided by the purchase price. While this is a fast way to evaluate a deal, it is highly misleading because it ignores expenses.

Net Rental Yield is the true metric. It takes the total rent, subtracts all operating expenses (Taxes, Insurance, HOA, Property Management, Maintenance), and divides the remaining profit (Net Operating Income) by the purchase price.

What is a Good Rental Yield?

Yields vary massively depending on the city and country.

• High Growth Cities: (e.g., San Francisco, Sydney) Yields are notoriously low (2% to 4%), but investors buy them hoping the property value doubles in 10 years.
• Cash Flow Markets: (e.g., Ohio, Manchester UK) Yields are much higher (7% to 12%), but the property value appreciates very slowly.

As a general rule, a Net Yield above 6% is considered a strong, cash-flowing investment in most modern western markets.

The Hidden Costs

When calculating Net Yield, do not forget vacancy rates and maintenance. You should always budget 8-10% of your gross rent for property management, and set aside at least 1% of the property's value annually for repairs (roofs, HVAC, plumbing).