Real Estate

Rental Yield Calculator

Calculate gross and net rental yield to evaluate and compare investment properties.

Quick Answer

Gross Yield = (Annual Rent / Property Price) x 100. A $350,000 property renting for $2,200/month ($26,400/year) has a 7.54% gross yield. After expenses, net yield is typically 2-3% lower.

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$
$

Gross Yield

7.54%

Net Yield

4.88%

Monthly Cash Flow

$1,423

1% Rule

0.63%

Below 1%

Annual Breakdown

Gross Annual Rent
$26,400
Vacancy Loss (5%)
-$1,320
Effective Rent
$25,080
Operating Expenses
-$8,000
Net Operating Income
$17,080
Disclaimer: This calculator provides estimates for informational purposes only and does not constitute financial or investment advice. Actual returns will vary. Consult a qualified real estate or financial professional before investing.

About This Tool

The Rental Yield Calculator helps landlords and investors evaluate how much return a rental property generates relative to its price. It calculates both gross yield (before expenses) and net yield (after expenses), plus the popular 1% rule screening test.

Gross vs. Net Rental Yield

Gross yield is the simplest metric: annual rent divided by purchase price. It's useful for quick comparisons but can be misleading because it ignores operating costs. Net yield subtracts vacancy, taxes, insurance, maintenance, and management before dividing, giving a more accurate picture of actual returns.

The 1% Rule

Many investors use the 1% rule as a quick screening tool. If monthly rent is at least 1% of the purchase price, the property has a reasonable chance of cash-flowing positively. Not every good deal hits 1%, especially in high-appreciation markets, but it's a fast way to filter listings.

Vacancy Rate

Vacancy is often underestimated by new investors. Even in tight rental markets, budget 5-8% for vacancy. This accounts for turnover time, make-ready costs between tenants, and the occasional bad month. Factoring vacancy into your yield calculation prevents unpleasant surprises.

Frequently Asked Questions

What is gross rental yield?
Gross rental yield is the annual rental income divided by the property purchase price, expressed as a percentage. It does not account for operating expenses, vacancy, or financing costs. A quick way to screen properties before deeper analysis.
What is net rental yield?
Net rental yield subtracts operating expenses (taxes, insurance, maintenance, management, vacancy) from the annual rent before dividing by property price. It gives a more realistic picture of investment return than gross yield.
What is the 1% rule in real estate?
The 1% rule says monthly rent should be at least 1% of the purchase price. A $300,000 property should rent for $3,000/month or more. It's a quick screening tool, not a definitive test — many good investments fall slightly below 1%.
What is a good rental yield?
In most US markets, a gross yield of 6-8% and a net yield of 4-6% is considered solid. High-cost urban areas may yield 3-4% gross, while smaller markets can exceed 10%. The right yield depends on your goals: cash flow vs appreciation.
How does vacancy rate affect rental yield?
Vacancy directly reduces your effective income. A 5% vacancy rate on $26,400 annual rent costs you $1,320/year. Always factor in realistic vacancy when calculating net yield — industry average is 5-8% for residential properties.

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