What is Rental Yield Calculator?
A rental yield calculator measures the annual return a rental property generates relative to its purchase price, expressed as a percentage. It's one of the fastest ways to screen investment properties and compare opportunities across different markets, price points, and rent levels.
Rental yield comes in two forms: gross yield, which simply divides annual rent by property price, and net yield, which subtracts operating expenses first for a more accurate picture of your true return. Savvy real estate investors always check both figures, since a property with an attractive gross yield can turn mediocre once property taxes, insurance, maintenance, and management fees are factored in. This calculator gives you both numbers instantly, letting you quickly compare multiple properties side by side.
Steps:
- Enter the property's purchase price.
- Input the expected or actual monthly rental income.
- Add your estimated annual operating expenses (tax, insurance, maintenance, management).
- View your gross yield, net yield, and monthly/annual net income instantly.
Formula
Gross Rental Yield = (Annual Rental Income ÷ Property Price) × 100
Net Rental Yield = ((Annual Rental Income − Annual Expenses) ÷ Property Price) × 100
Use Cases
- Screening potential rental properties before making an offer
- Comparing rental yield across different cities or neighborhoods
- Evaluating whether a property's asking price is justified by its rent
- Tracking yield changes as rent or property value shifts over time
Key Benefits
- Instantly compare gross and net rental yield
- See your monthly and annual net income clearly
- Quickly screen multiple properties for investment potential
- Understand exactly how expenses reduce your true return
Pro Tips
- Always calculate net yield, not just gross yield
- Budget realistically for vacancy and maintenance
- Compare yield against local market averages before buying
Common Mistakes to Avoid
- Using gross yield alone without subtracting expenses
- Forgetting property management and vacancy costs
- Comparing yields across markets with very different risk levels
Key Terms Explained
- Gross Yield: Annual rent divided by property price
- Net Yield: Gross yield minus operating expenses
- Operating Expenses: Tax, insurance, maintenance, management costs
- Cap Rate: Similar metric based on net operating income
Example
A $300,000 property renting for $1,800/month ($21,600/year) with $4,000 in annual expenses: Gross yield is 7.2% ($21,600 ÷ $300,000). Net yield is 5.87% (($21,600 − $4,000) ÷ $300,000), giving you $17,600 in annual net income, or about $1,467 per month.