Rental Yield Calculator
Free Rental Yield Calculator. Free online tool with accurate results using verified formulas. Includes worked examples, FAQ, and instant calculations.
Rental Yield Calculator
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Formula: Net Yield = (Annual Rent × (1 - Vacancy Rate) - Expenses) / Property Value × 100
Worked example — Gross Yield: 7.54% | Net Yield: 5.11% | Monthly Cash Flow: $1,490
Reviewed for accuracy by Sahil, Senior Finance & Tax Editor · Editorial policy
Rental Yield Calculator Formula
Net Yield = (Annual Rent × (1 - Vacancy Rate) - Expenses) / Property Value × 100
Gross yield divides total annual rent by property value. Net yield subtracts vacancy losses and operating expenses first, giving a more realistic return figure. Both are expressed as percentages.
Rental Yield Calculator — Worked Examples
Example 1: Suburban Single-Family Rental
Problem:A $350,000 home rents for $2,200/month with $7,200 annual expenses and 5% vacancy rate. What is the yield?
Solution:Gross Annual Rent = $2,200 × 12 = $26,400 Vacancy Loss = $26,400 × 5% = $1,320 Effective Rent = $26,400 - $1,320 = $25,080 Net Income = $25,080 - $7,200 = $17,880 Gross Yield = $26,400 / $350,000 = 7.54% Net Yield = $17,880 / $350,000 = 5.11%
Result:Gross Yield: 7.54% | Net Yield: 5.11% | Monthly Cash Flow: $1,490
Example 2: Urban Condo Rental
Problem:A $500,000 condo rents for $2,800/month with $12,000 annual expenses (including HOA) and 3% vacancy rate.
Solution:Gross Annual Rent = $2,800 × 12 = $33,600 Vacancy Loss = $33,600 × 3% = $1,008 Effective Rent = $33,600 - $1,008 = $32,592 Net Income = $32,592 - $12,000 = $20,592 Gross Yield = $33,600 / $500,000 = 6.72% Net Yield = $20,592 / $500,000 = 4.12%
Result:Gross Yield: 6.72% | Net Yield: 4.12% | Monthly Cash Flow: $1,716
Rental Yield Calculator — Frequently Asked Questions
What is rental yield and why does it matter?
Rental yield is the annual return on a rental property expressed as a percentage of the property's value. It's one of the most important metrics for evaluating rental property investments. Gross rental yield uses total rent income before expenses, while net rental yield accounts for operating costs and vacancy. A higher yield means the property generates more income relative to its cost. Typical gross yields range from 4-12% depending on the market, with net yields typically 2-4% lower.
What is a good rental yield?
A good gross rental yield is typically 6-10%. Below 5% is considered low yield (common in expensive metro areas), 5-8% is moderate, and above 8% is high yield. However, high-yield properties often carry more risk — they may be in less desirable areas, require more maintenance, or have higher tenant turnover. Net yield above 5% is generally considered strong. The '1% rule' suggests monthly rent should be at least 1% of the purchase price (equivalent to 12% gross yield), though this is difficult to achieve in many markets.
What is vacancy rate and how does it affect yield?
Vacancy rate is the percentage of time a rental property sits empty between tenants. A 5% vacancy rate means the property is vacant about 18 days per year on average. Vacancy directly reduces your effective income. National average vacancy rates are around 6-7%, but vary widely by location: urban areas with strong demand may see 2-4%, while rural or oversupplied markets may see 10-15%. Always factor vacancy into your calculations — assuming zero vacancy leads to overly optimistic projections.
What expenses should I include in rental yield calculations?
Include all recurring operating expenses: property taxes, property insurance, maintenance and repairs (budget 1-2% of property value per year), property management fees (8-12% of rent if using a manager), landlord-paid utilities, HOA fees, pest control, lawn care, and legal/accounting costs. For a more accurate picture, also consider a capital expenditure reserve (5-10% of rent) for major items like roof, HVAC, and appliances. Don't include mortgage payments in expense calculations for yield — those are financing costs, not operating expenses.
How does rental yield differ from cap rate?
Rental yield and cap rate are closely related but have subtle differences. Cap rate uses Net Operating Income (NOI) divided by property price or market value and is the standard metric in commercial real estate. Net rental yield is essentially the same calculation. Gross rental yield uses total rent income without deducting expenses. The key difference is context: cap rate is used more for comparing investment properties and market analysis, while rental yield is used more for evaluating individual property performance and income potential.
What expenses should I include in a rental property analysis?
Include mortgage, property tax, insurance, HOA fees, property management (8-12% of rent), maintenance (1% of value/year), vacancy allowance (5-10%), utilities you cover, and capital expenditure reserves.
Should I manage my rental property myself or hire a manager?
Self-management saves 8-12% of rent but requires time for tenant screening, maintenance, and emergencies. Property managers handle everything but reduce cash flow. Consider self-managing nearby properties and hiring managers for distant ones.
Rental Yield Calculator — Background & Theory
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