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Rental Yield Calculator
Use this free rental yield calculator to see what a property really earns. Enter the price, the rent, and the annual costs, and it shows the gross yield and the net yield after expenses — with a live chart comparing the two.
| Figure | Value |
|---|---|
| Annual rent | $18,000.00 |
| Annual expenses | $6,400.00 |
| Net rental income | $11,600.00 |
| Gross yield | 7.20% |
| Net yield | 4.64% |
| Monthly net income | $966.67 |
How it works
Rental yield is the headline number for any property bought to rent out: it expresses the rent as a percentage of the property's price, so properties of very different sizes can be compared on equal terms. A $250,000 property renting for $1,500 a month and a $500,000 property renting for $3,000 a month have exactly the same yield, even though the second costs twice as much. That comparability is the whole point — yield turns a property listing into a single number you can rank.
There are two yields, and the gap between them is where most buying mistakes hide. Gross yield is annual rent divided by the property price: monthly rent × 12 ÷ price. It is quick to calculate from a listing, which is why agents quote it, but it pretends the property costs nothing to own. Net yield subtracts the real costs first — property tax, insurance, maintenance, a vacancy allowance for empty months, and any management or association fees — and divides what is left by the price. Net yield is always lower, and it is the number that matters, because it is the return on the price you actually pay.
The vacancy allowance deserves attention because new investors often leave it out. A property is rarely rented for all twelve months of every year: tenants leave, repairs take weeks, and finding a replacement takes time. Allowing 5% of annual rent for vacancy — about eighteen empty days a year — is a modest, realistic starting point, and in weaker rental markets 8% to 10% is safer. Maintenance is the same story: roofs, appliances, and plumbing fail on a schedule nobody controls, so a fixed annual allowance beats hoping for a quiet year. Put honest numbers in both fields and the net yield you see is one you can defend.
What counts as a good yield depends on the market. In expensive cities, gross yields of 3% to 4% are common, and investors there are usually betting on the property's value rising. In cheaper markets, gross yields of 7% to 9% are normal, and the rent itself has to do the work. As a rough guide, a net yield above 5% is solid in most markets, and a net yield under 3% means the rent barely covers the costs of owning the place. But yield alone never makes a property a good buy: it says nothing about the mortgage, the condition of the building, the quality of the tenants, or whether the area is improving or declining.
Yield also ignores financing, which is both its strength and its limit. Two buyers can get different returns from the same property because one paid cash and the other borrowed most of the price — that difference is what the cash on cash return measures, and it is worth calculating alongside yield. Use yield to shortlist properties quickly, then use cash on cash return, a full cash-flow check, and a look at the property itself before making an offer. A high yield on a property nobody wants to live in is not a bargain; it is a warning.
Worked example
A property costs $250,000 and rents for $1,500 a month. Annual costs are $2,500 of property tax, $1,200 of insurance, $1,800 of maintenance, and a 5% vacancy allowance.
Step 1: Annual rent is $1,500 × 12 = $18,000.
Step 2: The vacancy allowance is 5% of $18,000 = $900.
Step 3: Total annual expenses are $2,500 + $1,200 + $1,800 + $900 = $6,400.
Step 4: Net rental income is $18,000 − $6,400 = $11,600.
Step 5: Gross yield is $18,000 ÷ $250,000 = 7.20%, and net yield is $11,600 ÷ $250,000 = 4.64%.
The result: a gross yield of 7.20% and a net yield of 4.64%, or $966.67 a month of net income. A second check: a $400,000 property renting for $2,000 a month gives annual rent of $24,000 and a gross yield of $24,000 ÷ $400,000 = 6.00% — lower, even though the rent is higher, because the price grew faster than the rent.
FAQ
What is a good rental yield?
It depends on the market. In expensive cities a gross yield of 3% to 4% is common, while in cheaper markets 7% to 9% is normal. As a rough guide, a net yield above 5% is solid in most markets, and under 3% the rent barely covers the costs of owning the property. Always compare yields within the same area, not across different cities.
What is the difference between gross yield and net yield?
Gross yield divides the full annual rent by the property price and ignores all costs. Net yield subtracts the annual costs — tax, insurance, maintenance, vacancy, and management — before dividing, so it shows what the property actually earns. Net yield is always lower, and it is the figure to use when comparing properties.
Does rental yield include the mortgage?
No. Yield is calculated on the full property price and ignores how you paid for it, so it is the same whether you bought with cash or a loan. To see the return on your own money, use the cash on cash return, which counts the down payment and subtracts the mortgage payment from the income.
How do I calculate rental yield?
Multiply the monthly rent by 12 to get the annual rent, then divide by the property price and multiply by 100. For net yield, subtract the annual expenses from the rent first. A $250,000 property at $1,500 a month gives $18,000 ÷ $250,000 = 7.20% gross.
Why is net yield so much lower than gross yield?
Because owning a property costs real money every year. On the example here, tax, insurance, maintenance, and vacancy take $6,400 of the $18,000 rent — more than a third of it — before the owner sees a cent. A listing that quotes only the gross yield is showing the property in its best possible light.