Rental Yield Calculator
Computes net rental yield by subtracting annual expenses from rental income and dividing by property value. Property investors use it to compare returns across markets and decide whether a property justifies its purchase price.
About this calculator
Rental yield measures how much annual income a property generates relative to its value. This calculator uses the net rental yield formula: Net Yield (%) = ((annualRentalIncome − annualExpenses) / propertyValue) × 100. Annual expenses typically include property management fees, insurance, maintenance reserves, property taxes, and vacancy allowances. Gross yield, by contrast, ignores expenses and simply divides annual rent by property value. Net yield is the more accurate metric for comparing investment quality because it reflects what actually reaches your pocket. A net yield of 4–6% is considered reasonable in most developed markets, though high-growth cities often see lower yields as price appreciation compensates for income returns. Always calculate yield based on current market value, not original purchase price, for an up-to-date picture.
How to use
A property is valued at $400,000 and rents for $2,500/month ($30,000/year). Annual expenses — management at $2,400, insurance $1,200, maintenance $1,500, taxes $3,900 — total $9,000. Net Yield = ((30,000 − 9,000) / 400,000) × 100 = (21,000 / 400,000) × 100 = 5.25%. This 5.25% net yield means you earn $5.25 for every $100 of property value annually — a solid return in most markets, especially if the property also appreciates over time.
Frequently asked questions
What is the difference between gross rental yield and net rental yield?
Gross rental yield divides total annual rent by property value without deducting any costs, giving an optimistic but incomplete picture. Net rental yield subtracts all operating expenses — management fees, maintenance, insurance, property taxes, and vacancy — before dividing by property value. The gap between gross and net yield is often 2–4 percentage points, so a property advertised at an 8% gross yield may deliver only 4–5% net. Always calculate net yield when making investment decisions, as gross yield can be misleading when comparing properties with different expense profiles.
How do I improve the net rental yield on my investment property?
The two levers are increasing income and reducing expenses. On the income side, keeping rents at market rates, minimizing vacancy through proactive tenant retention, and adding value-add amenities (laundry, parking, storage) can meaningfully boost revenue. On the expense side, refinancing to a lower rate, self-managing the property, shopping insurance annually, and batching maintenance work can cut costs. Even a 1% improvement in net yield on a $400,000 property adds $4,000 in annual income. Periodic yield reviews — at least annually — help you spot when a property is underperforming relative to current market conditions.
What is a good net rental yield for an investment property in the US?
In the US, a net rental yield of 4–6% is broadly considered acceptable for residential buy-and-hold investing, while 6–8% or higher is considered strong. Yield varies enormously by market: gateway cities like San Francisco and New York often yield 2–4% net due to high prices, while Midwest and Sun Belt markets can yield 6–10% net. Investors in high-yield markets typically accept lower appreciation potential as a trade-off. Your target yield should also cover your cost of financing — if your mortgage rate is 7%, a 5% net yield means negative cash flow, so the investment only makes sense if you expect significant appreciation.