Rental Yield Calculator
Assess real estate returns with vacancy and operating expense modeling.
Rental Yield Calculator
Compare gross rent yield with a simplified vacancy- and expense-adjusted yield.
Operating estimate
Simplified net yield
8.20%
- Gross yield
- 12.00%
- Annual NOI estimate
- $16,800
- Monthly cash flow before financing
- $1,400
NOI here subtracts entered annual operating expenses and vacancy only. It excludes debt service, taxes, insurance if not entered, capital expenditures, management, and income tax. Not investment advice.
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What This Calculator Does
The Rental Yield Calculator measures property investment performance by comparing annual rental income against purchase price and operating costs. It computes gross rental yield, vacancy-adjusted net rental yield, annual net operating income (NOI), and pre-financing cash flow.
How It Works
Gross yield divides scheduled annual rent by purchase price. Net operating income subtracts vacancy allowance and annual operating expenses (taxes, insurance, maintenance, management). Net yield then divides net operating income by total capital invested (purchase price plus closing costs).
Example
A $300,000 property with $10,000 closing costs renting for $2,500/month with $6,000 in annual expenses and 5% vacancy generates a 10.00% gross yield and a 7.26% net yield.
Formula
Gross Yield = (Annual Scheduled Rent / Purchase Price) × 100NOI = (Annual Rent × (1 − Vacancy% / 100)) − Annual ExpensesNet Yield = (NOI / (Purchase Price + Closing Costs)) × 100Reading the Results
Gross Yield
Annual scheduled rental income expressed as a percentage of the property purchase price before expenses.
Net Yield
Annual net operating income divided by total capital invested including closing costs.
Annual Net Operating Income
Actual annual cash earnings after accounting for tenant vacancies and operating expenses.
Frequently Asked Questions
What is a good rental yield?
Typically, gross yields between 5% and 8% are considered reasonable in urban residential markets, while higher-yield properties (8%+) often carry greater vacancy or maintenance risks.
Why is net yield more accurate than gross yield?
Gross yield ignores property taxes, insurance, repairs, property management fees, and vacancy gaps. Net yield reflects actual money left in your pocket relative to total cash invested.
Does this calculator include mortgage financing?
The tool calculates Net Operating Income and unleveraged property yield. To calculate cash-on-cash return with debt, subtract your annual mortgage payment from NOI.