Rental Yield Calculator

The Rental Yield Calculator works out the gross and net rental yield on an investment property from its purchase price, rent, and operating expenses. Yield is the single most useful number for comparing income properties because it strips price out of the picture and tells you what each property earns per year as a percentage. This tool shows both yields on one dual-pointer gauge, reveals how much of the rent your expenses consume, and gives you the price-to-rent ratio and payback period — all with a clear step-by-step breakdown.

What is Rental Yield?

Rental yield is the annual rental income of a property expressed as a percentage of its value. A property bought for 300,000 that rents for 18,000 a year has a gross yield of 6%. Because yield is a percentage, you can line up a cheap flat against an expensive house and instantly see which one works harder for your money — something the raw rent or price alone can never tell you.

Gross vs Net Rental Yield

There are two yields that every investor should know, and the gap between them is where the real story lives.

• Gross rental yield is the headline number: annual rent divided by purchase price. It is quick and great for shortlisting, but it ignores every running cost.
• Net rental yield subtracts annual operating expenses — management, insurance, maintenance, property taxes, and similar — and divides by the total amount you actually invested, including one-off purchase costs. It is the figure that reflects the income you genuinely keep.

A high gross yield with a much lower net yield is a warning sign that costs are eating the return. The dual-pointer gauge in this tool is designed to make that gap impossible to miss.

Rental Yield Formula

If you only know the monthly rent, multiply it by 12 to annualize it first. Leaving purchase costs out simply makes the net-yield denominator equal to the purchase price.

What is a Good Rental Yield?

There is no single right answer because yields depend heavily on the local market — high-priced cities tend to deliver low yields with stronger capital growth, while cheaper areas often show high yields but carry other risks. As a rough guide for residential property, the table below shows how this calculator bands the net yield.

What Counts as an Operating Expense?

Note that mortgage payments are not operating expenses — they are a financing cost. Rental yield deliberately ignores financing so you can compare the properties themselves. To judge the return on the cash you put in, use a cash-on-cash return calculation instead.

Rental Yield vs Cap Rate

Capitalization rate (cap rate) is net operating income divided by the property's current market value. Net rental yield is net income divided by your total purchase cost. When the price you paid equals today's market value, the two numbers are nearly identical. The practical difference is the denominator: cap rate floats with the market, while net yield is anchored to what you actually spent — which is what you usually care about as a buyer.

How to Use This Calculator

1. Choose your currency and enter the purchase price of the property.
2. Enter the rent and select whether the figure is per month or per year.
3. Enter the annual operating expenses — management, insurance, maintenance, taxes, and so on. Optionally add one-off purchase costs such as stamp duty or closing costs.
4. Click Calculate to see your gross and net yield on the gauge, the income split, the price-to-rent ratio, the payback period, and a full step-by-step breakdown.

Frequently Asked Questions

What is rental yield?

Rental yield is the annual rental income of a property expressed as a percentage of its value. It tells you how much income the property generates each year relative to what you paid for it, which makes it easy to compare different properties regardless of price.

What is the difference between gross and net rental yield?

Gross rental yield is the annual rent divided by the purchase price, before any costs. Net rental yield subtracts annual operating expenses such as management fees, insurance, maintenance, and property taxes, and can also account for one-off purchase costs in the denominator. Net yield is a more realistic measure of the income you actually keep.

How do you calculate rental yield?

For gross yield, divide the annual rent by the purchase price and multiply by 100. For net yield, subtract annual operating expenses from the annual rent to get net income, then divide by the total amount invested (purchase price plus any purchase costs) and multiply by 100.

What is a good rental yield?

It varies by market, but as a rough guide a net rental yield below 3% is weak, 3% to 5% is modest, 5% to 7% is healthy, and above 7% is strong. Expensive cities tend to have lower yields, while cheaper areas often have higher yields but other risks.

Is rental yield the same as cap rate?

They are closely related but not identical. Capitalization rate is net operating income divided by the current market value of the property. Net rental yield is net income divided by the price you paid plus purchase costs. When the purchase price equals the current value and the cost basis is the same, the two are very similar.

Does rental yield include the mortgage?

No. Rental yield measures the income return of the property itself and ignores how it is financed. Mortgage interest is a financing cost, not an operating expense, so it is excluded from yield. To assess returns on the cash you actually put in, look at cash-on-cash return instead.

Additional Resources

• Capitalization Rate - Wikipedia