Rental Property Yield Calculator
Calculate gross and net rental yield on an investment property. Use this when comparing properties or assessing whether rental income justifies the purchase price.
About this calculator
Rental yield measures the annual return a property generates relative to its value, expressed as a percentage. Gross yield ignores vacancies and expenses, while net yield gives a more realistic picture of profitability. The net rental yield formula used here is: Net Yield (%) = ((monthlyRent × 12 × (1 − vacancyRate / 100) − annualExpenses) / propertyValue) × 100. The vacancy rate adjusts gross rent downward to account for periods when the property sits empty. Subtracting annual expenses — such as insurance, maintenance, and management fees — from that adjusted rent gives true net income. Dividing by property value and multiplying by 100 converts the result into a percentage, making it easy to compare against other investments like bonds or stocks.
How to use
Suppose you buy a property for $400,000, charge $2,000/month rent, have $4,000 in annual expenses, and expect a 5% vacancy rate. Step 1 — Adjusted annual rent: $2,000 × 12 × (1 − 5/100) = $24,000 × 0.95 = $22,800. Step 2 — Net annual income: $22,800 − $4,000 = $18,800. Step 3 — Net yield: ($18,800 / $400,000) × 100 = 4.7%. A 4.7% net yield means you earn $4.70 for every $100 of property value each year after vacancies and expenses.
Frequently asked questions
What is a good rental yield for an investment property?
A net rental yield of 4–6% is generally considered healthy in most markets, though this varies significantly by city and property type. High-growth urban areas often show lower yields (2–4%) because capital appreciation is expected to compensate. Regional or regional markets may offer 7–10% yields but with slower price growth. Always weigh yield alongside capital growth potential and local vacancy trends before deciding.
How does vacancy rate affect rental yield calculations?
The vacancy rate reduces the effective annual rent by accounting for periods when the property earns no income. Even a 5% vacancy on a $2,000/month property cuts annual income by $1,200, directly lowering your net yield. Ignoring vacancy leads to overestimating returns, which can make a poor investment look attractive. Using a realistic local vacancy rate — typically 3–8% — gives a far more accurate profitability picture.
What expenses should I include when calculating net rental yield?
Annual property expenses typically include property management fees (8–12% of rent), maintenance and repairs, landlord insurance, council rates, strata or HOA fees, and accountancy costs. Mortgage interest is sometimes excluded because yield is meant to measure property performance independently of financing. Including all recurring out-of-pocket costs ensures the net yield reflects your true cash-on-cash return. Underestimating expenses is one of the most common mistakes new property investors make.