Gross Rental Yield Calculator
Calculates the gross rental yield of an investment property — annual rent as a percentage of the property’s value. It is the quickest way to compare the income potential of different properties before accounting for costs.
Last updated: May 2026
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About this calculator
Gross rental yield expresses a property’s annual rental income as a percentage of its value or purchase price: (annual rent ÷ property value) × 100. It is the headline number landlords and investors use for a first-pass comparison because it is fast and needs only two inputs. A property renting for $18,000 a year and valued at $300,000 has a gross yield of 6%. As a rough guide, gross yields of 5–8% are considered healthy in many markets, though "good" varies widely by location: high-growth cities often show low yields (because prices are bid up faster than rents) while cheaper regional areas can show high yields with more vacancy and management risk. The key limitation is in the word "gross": this figure ignores all costs. It does not subtract property taxes, insurance, maintenance, management fees, mortgage interest, or void periods between tenants — all of which can easily consume a third to a half of rental income. That is why a high gross yield is only a starting filter; net rental yield (which subtracts running costs) and cash-on-cash return (which accounts for financing) give a truer picture of profitability. Use gross yield to shortlist properties and compare them on a like-for-like basis, then dig into the expense numbers before committing. Always use a realistic, market-based rent — not an optimistic asking rent — and the actual price you would pay, including any negotiated discount, for the most meaningful result.
How to use
Example 1 — Suburban rental. A property costs $300,000 and rents for $1,500/month, or $18,000/year. Enter 18000 and 300000. Result: 6%. Verify: 18,000 ÷ 300,000 = 0.06; × 100 = 6%. ✓ A solid gross yield, but check costs before assuming it is profitable. Example 2 — High-priced city flat. A $600,000 apartment rents for $2,000/month ($24,000/year). Enter 24000 and 600000. Result: 4%. Verify: 24,000 ÷ 600,000 = 0.04; × 100 = 4%. ✓ A lower gross yield typical of expensive markets, where investors often rely on capital growth rather than income.
Frequently asked questions
What is a good gross rental yield?
It depends heavily on location, but many investors look for gross yields of around 5–8%. Below 5% usually means you are relying on capital appreciation rather than income, which is common in expensive, high-demand cities. Above 8% can signal strong cash flow but often comes with higher risk — more vacancy, tougher tenant markets, or properties in declining areas. Because gross yield ignores costs, a "good" gross figure does not guarantee profit; a 9% gross yield can become a 3% net yield after taxes, maintenance, and management. Always compare yields within the same market and follow up with a net-yield analysis.
What is the difference between gross and net rental yield?
Gross yield divides annual rent by property value and ignores expenses, so it overstates real return. Net yield subtracts running costs — property taxes, insurance, maintenance, repairs, management fees, and allowance for vacancy — before dividing by the property value, giving a far more honest profitability figure. For example, a property with a 7% gross yield might have a 4% net yield once you deduct 40% of rent in costs. Gross yield is useful for quick screening and comparison; net yield is what you should base an investment decision on. Neither includes mortgage costs, which the cash-on-cash return metric handles.
Should I use property value or purchase price?
Use the price you would actually pay if you are evaluating a purchase, because that is your real capital outlay and gives the yield you would actually earn. Use current market value if you are assessing a property you already own to see its yield at today’s prices. The two differ when a property has appreciated: a home bought for $200,000 that is now worth $300,000 has a much higher yield on the original purchase price than on its current value. Be consistent and clear about which you are using, especially when comparing properties.
What mistakes do investors make with rental yield?
The biggest mistake is treating gross yield as profit — it is income before any costs, and real expenses can halve it. Another is using an optimistic asking rent rather than achievable market rent, which inflates the figure; check comparable listings and assume some vacancy. Investors also forget to include all purchase costs (stamp duty, legal fees, renovation) in the property value, which understates true capital invested. Comparing yields across very different markets without context is misleading, since a 4% yield in a growth city may outperform an 8% yield in a stagnant one once capital growth is included. Finally, ignoring financing costs hides whether the deal actually cash-flows.
When is gross rental yield not the right metric?
Gross yield is a poor decision tool whenever costs or financing dominate the picture. If you are buying with a mortgage, cash-on-cash return (which compares your net cash flow to the actual cash you invested) matters more. If running costs are high — older properties, strata/HOA fees, or high-tax jurisdictions — net yield is essential. For commercial property, capitalisation rate (cap rate) is the standard. And if your strategy is built on appreciation rather than income (common in fast-growing cities), yield alone misses the point entirely. Use gross yield only as a fast first filter, never as the sole basis for an investment.