Rental Yield Calculator
Calculate both gross and net rental yield for any investment property. Compare income potential across properties to find the best deals.
Quick Answer
Gross Yield = (Monthly Rent x 12) / Property Value x 100. A $2,000/mo rent on a $300,000 property = 8% gross yield. Net yield subtracts annual expenses first.
Calculate Rental Yield
Enter monthly rent, property value, and annual expenses.
About This Tool
The Rental Yield Calculator helps property investors evaluate income-producing real estate by calculating both gross and net rental yield. These metrics provide a quick way to assess whether a property generates sufficient income relative to its value, making it easy to compare properties across different neighborhoods, cities, or price ranges.
Gross Yield vs. Net Yield
Gross rental yield is the simplest calculation — just annual rent divided by property value. It is useful for quick comparisons and initial screening. However, it overstates actual returns because it ignores operating expenses. Net rental yield subtracts annual expenses from rental income before dividing by property value, giving you a more realistic picture of the property's income performance.
What Expenses to Include
For net yield calculations, include all recurring annual operating expenses: property taxes, landlord insurance premiums, maintenance and repair budgets (typically 1-2% of property value), property management fees (8-10% of gross rent if using a manager), vacancy allowance (5-8% of gross rent), HOA or condo fees, owner-paid utilities, and landscaping. Exclude mortgage payments — those are financing costs, not operating expenses.
Using Rental Yield for Property Comparison
Rental yield is most powerful as a comparison tool. When evaluating multiple properties, calculate the net yield for each to see which generates the most income per dollar of value. A $200,000 property generating $1,500/month might have a better yield than a $400,000 property at $2,500/month. The numbers tell the story: 9% gross yield vs. 7.5% gross yield. This doesn't mean the cheaper property is always better — appreciation, neighborhood quality, and tenant profile matter too.
The 1% Rule
A popular rule of thumb in rental investing is the 1% rule: the monthly rent should be at least 1% of the purchase price. A $300,000 property should rent for at least $3,000/month. This translates to a 12% gross yield — an ambitious target in many markets. While properties meeting the 1% rule are harder to find in expensive markets, the rule remains a useful quick filter for identifying properties worth deeper analysis.
Market Context Matters
Rental yields vary dramatically by market. In high-cost cities like San Francisco or New York, gross yields of 3-4% are common because property values are extremely high relative to rents. In midwestern cities like Cleveland, Indianapolis, or Memphis, gross yields of 8-12% are achievable. International markets can offer even higher yields. Always compare yields within the same market category and consider the total return picture including appreciation potential.