Rental Yield Calculator
Calculate gross yield, net yield, cap rate, and monthly cash flow instantly. Enter your numbers below — results update in real time.
Property Details
Total acquisition cost before taxes
HOA, insurance, property management
% of time the property is empty
% of purchase price (e.g. 2% = 2)
Rule of thumb: 1% of purchase price/yr
Results
Gross Rental Yield
7.20%
Net Rental Yield
4.88%
Cap Rate
4.88%
Monthly Cash Flow
$1,016.67
Annual Cash Flow
$12,200.00
How to Calculate Rental Yield
Rental yield is calculated by dividing the annual rent by the property purchase price and multiplying by 100.
Gross Rental Yield
(Monthly Rent × 12) ÷ Purchase Price × 100
Example: ($1,500 × 12) ÷ $250,000 × 100 = 7.2%
For a more accurate figure, calculate net rental yield by subtracting all annual costs (expenses, vacancy loss, repairs) from the annual rent before dividing by the total purchase cost (including transfer taxes).
Gross vs Net Rental Yield
| Metric | What it includes | Best used for |
|---|---|---|
| Gross Yield | Annual rent only | Quick market comparisons |
| Net Yield | Rent minus all operating costs & vacancy | Real investment decisions |
| Cap Rate | NOI ÷ purchase price (no financing) | Comparing unleveraged returns |
Always use net yield for making actual buy/pass decisions. Gross yield is useful only for quick, top-of-funnel filtering when comparing many markets or properties.
What Is a Good Rental Yield?
What counts as a “good” yield depends on your market, strategy, and risk tolerance. General benchmarks for gross yield:
- > 8% — High yield. Often in lower-cost cities with strong rental demand. Carefully check vacancy risk and capital appreciation potential.
- 6–8% — Excellent. Strong cash-flow potential if costs are controlled.
- 4–6% — Good. Typical for prime urban markets in Europe and major US cities.
- < 4% — Low. May be justified by strong appreciation (e.g. central London, Paris), but cash flow will be negative or near zero.
Note: net yields are typically 1.5–3 percentage points below gross yields once costs are included.
Frequently Asked Questions
- What is rental yield?
- Rental yield is the annual return on a property investment expressed as a percentage of the property's value. It measures how much income you earn relative to what you paid for the property.
- What is the difference between gross and net rental yield?
- Gross rental yield only considers the annual rent divided by the purchase price. Net rental yield deducts all operating costs — maintenance, insurance, property management, vacancy loss, and repairs — giving a more realistic picture of your actual return.
- What is a good rental yield?
- A gross yield of 6% or higher is generally considered good in most markets. Net yields of 4–6% are solid. Below 4% net may still make sense in high-appreciation markets, but the property may not be cash-flow positive from day one.
- What is cap rate?
- Cap rate (capitalization rate) is the net operating income (NOI) divided by the purchase price. It is similar to net yield but does not account for financing costs, making it useful for comparing properties independently of how they are financed.
- Does this calculator include mortgage costs?
- No — this calculator uses an unleveraged analysis. If you have a mortgage, your actual cash flow will be lower because you must deduct monthly mortgage payments. A mortgage calculator is coming soon to Figvest.