Rental Yield Calculator

Please fill in the required fields with values greater than 0.
–gross rental yield
–net rental yield
–net operating income per year
–monthly cash flow after mortgage

Estimate only. Net yield is also called the cap rate. It does not include income tax, agent fees or one-off repairs.

How to use this calculator

Enter the price of the property, the monthly rent, your yearly costs and a vacancy allowance. Add the mortgage payment to see your monthly cash flow. Press Calculate to see the gross and net rental yield.

The formula

Gross yield = yearly rent ÷ price × 100
Net operating income = yearly rent × (1 − vacancy %) − yearly costs
Net yield = net operating income ÷ price × 100

Example: A $300,000 property rented for $2,000 a month has a gross yield of 8%. With 5% vacancy and $6,000 in yearly costs, net income is $16,800 and the net yield is 5.6%. With a $1,500 mortgage, the monthly cash flow is −$100.

How to read your rental yield results

Rental yield shows how much income a property produces compared with its price. The gross figure uses rent alone. The net figure, also called cap rate, subtracts vacancy and running costs, so it is the better guide to what the property actually earns. Monthly cash flow goes one step further and shows whether the rent also covers your mortgage payment.

A worked example

Take a $300,000 home rented at $2,000 a month. Yearly rent is $24,000, so gross yield is 8%. Allow 5% for vacancy and $6,000 for yearly costs, and net operating income falls to $16,800. That is a net yield of 5.6%. Add a $1,500 monthly mortgage payment and cash flow is about minus $100 a month. A property can show a healthy gross yield and still cost you money each month.

What moves the numbers

  • Purchase price. Paying more for the same rent lowers every yield figure.
  • Rent level. Check comparable listings rather than relying on the seller’s estimate.
  • Running costs. Property tax, insurance, repairs, HOA dues and management fees can take a large share of the rent.
  • Vacancy. Even one empty month a year is about 8% of rent.
  • Financing. Interest rate and down payment do not change yield, but they decide your cash flow.

Common mistakes

  • Comparing properties on gross yield only. Two homes with the same gross yield can have very different net yields if one has high taxes or HOA fees.
  • Leaving out maintenance. Many owners budget about 1% of the property value each year, more for older homes.
  • Setting vacancy at zero. Turnover, cleaning and finding a new tenant take time.
  • Forgetting one-off costs such as closing costs, a new roof or appliance replacement. The calculator does not include these.

Planning tips

Run the calculator several times with less optimistic inputs, such as lower rent, 8 to 10% vacancy and higher costs. If the property still works, it has a margin of safety. Keep a cash reserve for repairs and empty months. This tool is for education only and is not financial advice. A financial advisor or tax professional can help you weigh taxes, depreciation and how a rental fits your wider plans.

Frequently asked questions

What is rental yield?
Rental yield is the yearly rent as a percentage of the property price. It shows the return before financing costs.
What is the difference between gross and net yield?
Gross yield uses only the rent. Net yield also subtracts yearly costs and vacancy.
What is a good rental yield?
Many investors look for 5 to 8 percent gross, but it depends on the area and risk.
What is cap rate?
Cap rate is the net operating income divided by the property price. It is the same as net yield in this calculator.
What costs should I include?
Property tax, insurance, maintenance, management fees, vacancy and HOA fees.
How do I calculate rental yield on a property I already own?
Use the current market value of the home as the price, not what you paid years ago. This shows the return you get by keeping the property versus selling it and investing the money elsewhere. Using your old purchase price can make the yield look much higher than the property is really earning on its value today.
Is rental yield the same as return on investment?
No. Yield compares income with the full property price. Return on investment, or cash-on-cash return, compares your yearly cash flow with the cash you actually put in, such as the down payment and closing costs. With a mortgage, the two numbers can be very different. Neither one includes price appreciation or income tax.
Why is my cash flow negative when the yield looks good?
Yield ignores financing. If your monthly mortgage payment is larger than the rent left after vacancy and costs, cash flow turns negative. High interest rates or a small down payment often cause this. Raising the rent, lowering costs or putting more money down can help, but run the numbers before you commit.