Finance

Rental Yield Calculator

Calculate gross and net rental yield for property investments. Determine the return on your rental property.

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Gross rental yield
8.00%
Annual rent ÷ property value
Property value
$300,000
Monthly rent
$2,000
Annual rent
$24,000
Vacancy loss (5%)
-$1,200
Effective annual rent
$22,800
Annual expenses
-$3,000
Net annual income
$19,800
Gross yield
8%
Net yield
6.6%

What Is Rental Yield?

Rental yield is a measure of the return on a rental property investment. It compares the rental income to the property's value, expressed as a percentage.

Gross vs Net Rental Yield

Gross rental yield is the simpler calculation that only considers rental income:

Gross Yield=Annual RentProperty Value×100\text{Gross Yield} = \frac{\text{Annual Rent}}{\text{Property Value}} \times 100

Net rental yield accounts for expenses, giving a more accurate picture of actual returns:

Net Yield=Annual Rent−Annual ExpensesProperty Value×100\text{Net Yield} = \frac{\text{Annual Rent} - \text{Annual Expenses}}{\text{Property Value}} \times 100

What Expenses to Include

When calculating net rental yield, consider these common expenses:

  • Property taxes
  • Insurance premiums
  • Maintenance and repairs
  • Property management fees
  • HOA fees
  • Vacancy allowance

What Is a Good Rental Yield?

Rental yields vary by location and property type, but general benchmarks include:

  • Below 4%: Low yield, typically in premium locations with capital growth potential
  • 4-6%: Average yield for many markets
  • 6-8%: Good yield, often in secondary markets
  • Above 8%: High yield, but may indicate higher risk or lower capital growth

Limitations

Rental yield doesn't account for:

  • Capital appreciation or depreciation
  • Mortgage costs and leverage
  • Tax implications
  • Time and effort of property management