Rental Yield Calculator
Created by: Isabelle Clarke
Last updated:
Enter property price, annual rent, and operating expenses to calculate gross and net rental yield, monthly cash flow, and cash-on-cash return — the key metrics for evaluating any rental property investment.
Rental Yield Calculator
FinanceCalculate gross yield, net yield, monthly cash flow, and cash-on-cash return for any investment property.
Property & Income
Annual gross rent: $24,000
Used to calculate cash-on-cash return
Annual Operating Expenses
Total expenses: $8,700 / yr
How to Calculate Rental Yield on an Investment Property
Rental yield is the foundational metric for evaluating a residential investment property — it tells you what percentage of the purchase price you earn in rental income each year.
Gross yield is simple and useful for quick comparisons; net yield is what actually matters for profitability because it accounts for the real costs of owning and operating the property.
A property with a 9% gross yield and 3% vacancy, 1.5% property taxes, 1% insurance, and 1% maintenance has a net yield closer to 5–6%.
That gap between gross and net is critical — it is the difference between a property that cash-flows positively and one that silently erodes your capital.
How Rental Yield and Cash-on-Cash Return Are Calculated
Gross yield divides annual rent by purchase price.
Net yield subtracts all annual operating expenses from rent before dividing by price.
Cash-on-cash return measures the annual net income as a percentage of the actual cash you invested (down payment plus closing costs) — useful when comparing leveraged and unleveraged scenarios.
Rental Yield Formulas
Gross yield = annual gross rent / property price × 100
Annual net income = annual gross rent − annual operating expenses
Net yield = annual net income / property price × 100
Monthly net cash flow = annual net income / 12
Cash-on-cash return = annual net income / down payment × 100
Example Scenarios
Single-Family Rental Property
Purchase price: $280,000. Annual rent: $24,000 ($2,000/month). Expenses: taxes $3,500, insurance $1,200, maintenance $2,800, vacancy reserve $1,200, management $1,920. Total expenses: $10,620. Net income: $13,380. Gross yield: 8.57%. Net yield: 4.78%. Monthly cash flow: $1,115. With 25% down ($70,000): cash-on-cash return 19.1%.
Comparing Two Properties at the Same Price
Property A: $300,000, $27,000 rent, $8,000 expenses → net yield 6.33%. Property B: $300,000, $30,000 rent, $14,000 expenses (older building) → net yield 5.33%. Property A has lower gross rent but lower costs and better net yield. Gross yield alone ($90 vs $100/mo per $10k price) would mislead — net yield reveals the better investment.
How People Use This Calculator
- Real estate investors comparing multiple properties before making an offer.
- Landlords evaluating whether a rent increase covers rising property tax or insurance costs.
- Buyers deciding between renting out a home versus selling it when relocating.
- Anyone benchmarking a local rental market's typical yields before entering.
- Financial advisors evaluating real estate allocation within a client's broader investment portfolio.
Tips for Accurate Rental Yield Analysis
Use actual or market-comparable rents rather than the current owner's claimed rent.
Verify by checking comparable active listings on Zillow, Rentometer, or Craigslist.
Sellers sometimes inflate rents or show artificially low vacancies.
Also factor in any planned rent increases and local rent control laws that may cap future increases.
Estimate maintenance costs at a minimum of 1% of property value per year for a well-maintained home, 1.5–2% for older properties.
Many beginner investors underestimate this.
A single HVAC replacement, roof repair, or plumbing job can wipe out a year of cash flow.
Use the maintenance line in this calculator to stress-test what happens when a major repair occurs.
Frequently Asked Questions
What is rental yield?
Rental yield is the annual rental income expressed as a percentage of the property's purchase price. Gross yield uses total rent before expenses; net yield deducts operating costs including property taxes, insurance, maintenance, and vacancy. Net yield is the more meaningful metric because it reflects what actually reaches your pocket after running the property.
What is a good rental yield?
In most U.S. markets, a gross yield of 8–10% is considered strong for a residential investment property. Net yields of 5–7% are typically considered healthy after accounting for operating expenses. Prime urban markets (New York, San Francisco, Seattle) often yield only 3–5% gross because prices are high relative to rents. Secondary and tertiary markets can deliver 10–15% gross yields with correspondingly higher management challenges.
What is the difference between rental yield and cash-on-cash return?
Rental yield compares income to the property's full purchase price. Cash-on-cash return compares income to only the cash you invested (your down payment plus closing costs), ignoring the leveraged portion of the purchase. Cash-on-cash is usually higher than net yield when using financing, because you only invested a fraction of the total price. Both metrics matter — yield for property comparison, cash-on-cash for evaluating return on your actual capital.
What expenses should I include in net yield?
Common operating expenses: property taxes (typically 1–2% of value annually), insurance ($1,000–$3,000/year), maintenance and repairs (1% of property value/year is a common rule of thumb), property management fees (8–12% of gross rent if outsourced), vacancy allowance (5–8% of annual rent, i.e., about 3–4 weeks per year), and utilities if landlord-paid. Mortgage payments are not an operating expense — they are financing costs.
How does vacancy affect rental yield?
Vacancy directly reduces effective gross rent. A property renting at $2,000/month earns $24,000 if 100% occupied, but only $22,800 at 5% vacancy (about 2.5 weeks vacant per year). In tight rental markets, vacancy can be 1–2%; in slower markets or with active turnover, 8–12% is more realistic. Always model a vacancy rate rather than assuming 100% occupancy.
Is rental yield the same as cap rate?
Net yield and cap rate are similar but not identical. Cap rate (capitalization rate) = net operating income (NOI) / property value. NOI excludes mortgage payments but also excludes capital expenditures (CapEx) like roof replacement and HVAC systems. Net yield as calculated here includes your maintenance estimate, which may or may not capture CapEx. Cap rate is the institutional standard for commercial property; net yield is more commonly used for residential.
Sources and References
- National Association of Realtors (NAR). Investment and Vacation Home Buyers Survey, 2023.
- Urban Land Institute. Emerging Trends in Real Estate, 2024.
- Zillow Research. Rental Market Report. zillow.com/research.