Rental Yield Calculator

What Is Rental Yield?

Rental yield is the simplest measure of a rental property’s income performance: annual rent divided by the property price, expressed as a percentage. It tells you how much income a property generates relative to what it costs.

There are two variants. Gross rental yield uses total rental income with no deductions. Net rental yield subtracts operating expenses first, showing the income left after the costs of ownership. US investors often use “cap rate” for the net variant — rental yield terminology is more common internationally but increasingly used in the US market as well.

The rental yield calculator above computes both gross and net yield from your property details, with benchmark comparisons to help you evaluate the result.

Rental Yield Formula

Gross Rental Yield:

Gross Yield = (Annual Rent / Property Price) x 100

Net Rental Yield:

Net Yield = ((Annual Rent - Operating Expenses) / Property Price) x 100

For a property priced at $300,000 with monthly rent of $2,000:

Annual rent = $2,000 x 12 = $24,000

Gross Yield = ($24,000 / $300,000) x 100 = 8.0%

If annual operating expenses total $9,000 (taxes, insurance, maintenance, management):

Net Yield = (($24,000 - $9,000) / $300,000) x 100 = 5.0%

The gap between gross and net yield reveals the property’s expense burden. Enter your numbers above to calculate instantly.

How to Calculate Rental Yield

Step 1: Find the annual rent. Multiply the monthly rent by 12. Use the current market rent for an accurate assessment — check comparable listings or ask a local property manager.

Step 2: Identify the property price. For a potential purchase, use the asking price or your offer price. For a property you already own, you can use either the original purchase price or current market value, depending on whether you want to measure yield on your original investment or current value.

Step 3: Divide and multiply. Annual rent divided by property price, multiplied by 100, gives you the gross yield percentage.

Step 4 (for net yield): Subtract operating expenses. Before dividing, deduct annual costs:

• Property taxes (check the county assessor’s website)
• Insurance premiums
• Maintenance and repairs (typically 1% to 2% of property value)
• Property management fees (8% to 10% of collected rent, if applicable)
• Vacancy allowance (5% is a standard starting assumption)

The calculator offers quick mode for a fast estimate and detailed mode for itemized expense tracking.

What Is a Good Rental Yield?

Rental yield benchmarks vary significantly by market. Here are typical gross yield ranges across the US:

The US national average gross rental yield is approximately 6.5%. Properties yielding above this benchmark are generating above-average income relative to their price.

Keep in mind that higher yield does not always mean a better investment. High-yield markets may have slower appreciation, higher vacancy, or greater management challenges. Lower-yield markets often compensate with stronger price appreciation and more stable tenant demand. The calculator’s benchmark comparison puts your property’s yield in context.

Rental Yield vs Cap Rate

Both rental yield and cap rate use the property price as the denominator, making them closely related metrics. The key difference is in the numerator:

Gross rental yield uses total annual rental income before any expenses. It is a quick screening metric that requires only two inputs: rent and price.

Cap rate uses net operating income (NOI) — rental income after vacancy and operating expenses. It provides a more thorough view of the property’s earning power after ownership costs.

For a property you recently purchased, net rental yield and cap rate produce the same number because the denominator (price) is identical. Over time, as the property appreciates, investors may recalculate yield against the original purchase price while updating cap rate to reflect current market value. This causes the two metrics to diverge.

Both metrics exclude financing. Neither accounts for mortgage payments, down payment, or loan terms. For a levered return that includes financing costs, use cash-on-cash return.

Calculate your cap rate →

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Limitations

Rental yield has clear boundaries that investors need to understand:

• Gross yield ignores expenses — it is inherently optimistic because operating costs, vacancy, and maintenance are not deducted.
• Net yield requires accurate data — the quality of your net yield calculation depends on realistic expense estimates, which can be hard to pin down before purchase.
• No financing impact — rental yield does not account for how you pay for the property. An all-cash buyer and a leveraged buyer see the same yield.
• No appreciation — yield measures income only. Properties in lower-yield markets may outperform on total return thanks to price appreciation.
• Static measure — yield reflects a single point in time and changes as rent, expenses, and property values shift.

Use gross yield for fast initial screening and net yield for more informed comparisons. Combine with cash-on-cash return for a complete view that includes your specific financing.

Frequently Asked Questions

What is a good rental yield in the US?

A gross rental yield of 6% to 8% is considered healthy, roughly matching the national average. Yields of 8% and above are strong, common in Midwest markets where property prices are lower relative to rents. Coastal markets often fall below 5%. Use the rental yield calculator above to see how your property compares to these benchmarks.

What is the difference between gross and net rental yield?

Gross rental yield uses total annual rent divided by the property price — no expenses are deducted. Net rental yield subtracts operating expenses like property taxes, insurance, maintenance, and property management before dividing by the price. Net yield gives a more realistic picture of income after ownership costs.

Is rental yield the same as cap rate?

Net rental yield and cap rate are nearly identical for a recent purchase, since both use the property price as the denominator and NOI as the numerator. They diverge over time as the property appreciates — yield may be recalculated against the original purchase price, while cap rate is typically recalculated against current market value.

How do I increase rental yield?

The three primary levers are increasing rent (through renovations, better marketing, or market-rate adjustments), reducing operating expenses (shopping insurance, appealing property tax assessments), and buying at a lower price through negotiation or off-market deals. The sensitivity analysis above shows how each change affects your yield.

Does rental yield include mortgage payments?

No. Rental yield is an unlevered metric that does not factor in financing. It measures the property’s income performance relative to its price regardless of how you pay for it. For a return metric that includes mortgage payments, use cash-on-cash return.