Rental Property Yield Calculator
Calculate the net annual rental yield on an investment property after vacancy, operating expenses, and acquisition costs. Use it to screen rental opportunities and confirm a property generates enough income to justify its price.
Last updated: May 2026
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About this calculator
Net rental yield expresses an income property's annual after-expense rent as a percentage of its all-in acquisition cost. The formula is: Net Yield (%) = ((Monthly Rent × 12 × (1 − Vacancy Rate / 100)) − Annual Expenses) / (Property Price + Purchase Costs) × 100. The numerator is effective gross income minus operating expenses, which is the same idea as net operating income (NOI) for residential property; the denominator is the all-in cost basis including closing costs, inspection, lender fees, and any immediate fix-up needed to make the unit rent-ready. Variables: Monthly Rent is achievable market rent (not your asking rent); Vacancy Rate is the percentage of the year the unit sits empty (5–8% is typical for stable markets, 10%+ for student or seasonal areas); Annual Expenses covers property tax, insurance, HOA, repairs, capital reserves, property management, utilities the landlord pays, and any other recurring costs but NOT mortgage payments; Property Price and Purchase Costs together are the cost basis. Edge cases: if expenses + vacancy losses exceed rent the yield is negative — the property loses money before financing. Net yield is different from cap rate (which uses property value, not all-in basis) and different from cash-on-cash return (which uses cash invested after debt). Use net yield for quick screening; switch to cash-on-cash and DSCR once you model a specific mortgage.
How to use
Example 1 — Suburban single-family. Property price $280,000, purchase costs $8,000, monthly rent $2,200, annual expenses $5,200 (tax + insurance + maintenance), vacancy 6%. Step 1: effective rent = 2,200 × 12 × (1 − 0.06) = 26,400 × 0.94 = $24,816. Step 2: NOI = 24,816 − 5,200 = $19,616. Step 3: cost basis = 280,000 + 8,000 = $288,000. Step 4: yield = 19,616 / 288,000 × 100 ≈ 6.81%. Verify ✓. A net yield near 7% in a single-family rental is solid for most US markets in 2025–26. Example 2 — Small multifamily, higher expenses. Property price $620,000, purchase costs $18,000, monthly rent $5,800 (across 4 units combined), annual expenses $14,500, vacancy 8%. Step 1: effective rent = 5,800 × 12 × 0.92 = 69,600 × 0.92 = $64,032. Step 2: NOI = 64,032 − 14,500 = $49,532. Step 3: cost basis = 620,000 + 18,000 = $638,000. Step 4: yield = 49,532 / 638,000 × 100 ≈ 7.76%. Verify ✓. Multifamily often beats single-family on yield because per-door operating costs scale better, but vacancy risk is higher when one of four units turns over.
Frequently asked questions
What is the difference between gross yield, net yield, and cap rate?
Gross yield = Annual Rent / Property Price, ignoring all expenses and vacancy — useful for a 30-second screen but always overstates true return because expenses are not optional. Net yield (this calculator) deducts vacancy and operating expenses from rent and uses all-in cost basis including purchase costs, giving the real cash return on what you actually invested before financing. Cap rate = NOI / Property Value (not all-in cost), so it ignores purchase costs and is typically slightly higher than net yield on the same property. Cash-on-cash return goes one step further and divides annual cash flow after mortgage payments by the cash you actually put in (down payment + closing costs), which can be much higher than net yield if leverage works in your favour. Each metric isolates a different aspect of the investment; sophisticated buyers calculate all four.
What is a good net rental yield in the US?
Net yield targets vary wildly by market and property type. In high-cost-of-living coastal cities (SF, NYC, LA) net yields often run 3–5% because prices have outpaced rents and tenants tolerate it. In Midwest and Southern secondary markets (Indianapolis, Memphis, Cleveland, Birmingham) 7–10% net yields are common, which is why out-of-state landlords concentrate there. Single-family rentals usually sit at the lower end of a market's range; small multifamily and student housing at the upper end. A practical rule: net yield should exceed your mortgage interest rate by 1.5–2 percentage points before leverage is worth the risk — at 7% mortgage rates that means targeting 8.5%+ net yield. Below that you are paying for appreciation, which may or may not materialize.
What expenses do landlords most commonly forget when computing yield?
The biggest miss is capital expenditure reserves — roofs, HVAC, water heaters, appliances, and exterior paint all wear out and must be replaced on a 10–25-year cycle. A reasonable reserve is 5–10% of rent set aside annually for cap-ex; landlords who skip this overstate yield and get blindsided when a $12,000 roof bill arrives. The second is property management at 8–12% of collected rent, even if you self-manage today; if you ever want to step back, the cost must come out of yield. The third is turnover cost — every tenant change costs roughly one month of rent in vacancy, painting, cleaning, and re-listing fees. The fourth is true property tax (especially after a re-assessment triggered by sale), not the prior owner's tax. Finally, many landlords forget HOA or special assessments in condo properties, which can spike unpredictably and crush yield in any given year.
When should I NOT use net rental yield?
Skip net yield for highly leveraged purchases where the mortgage payment dominates economics — use cash-on-cash return instead, which captures the leverage effect on the cash you actually put in. Avoid it for commercial properties (office, retail, industrial); the industry standard there is cap rate, and using net yield will mismatch how brokers and lenders quote deals. Do not use it for flips or value-add projects where the holding period is short and the exit price drives returns more than ongoing rent; use ROI or IRR on the full deal life instead. It is also unreliable for short-term rentals (Airbnb, VRBO) where revenue is highly seasonal and dependent on platform algorithms; use trailing-12-month actual revenue minus the long list of platform-specific costs (cleaning, supplies, software, platform fees) rather than a steady monthly rent assumption.
How does net rental yield compare to other investments like stocks or bonds?
A 7% net yield on a rental looks comparable to the long-run nominal return on US stocks (~10%) but the comparison hides several important differences. Rental yield is cash income today, paid monthly, against a relatively illiquid asset — it has bond-like cash flow with stock-like volatility in the underlying value. Stocks pay 1.5–2% in dividends and rely on appreciation for the rest; rental property pays cash yield today AND can appreciate. On the downside, rental returns require active management (or paying 8–12% for it), come with concentrated risk (one bad tenant or a roof failure can wipe out a year of yield), and tie up capital that can take 60–90 days to liquidate. The fair comparison is total return — yield plus appreciation, net of all expenses — against a passive index fund. Done honestly, rentals win in cheap markets with good cash flow; they lose in expensive markets where yields are thin and you are paying for hoped-for appreciation.