Deal Analysis
Rental Yield Calculator
Calculate gross and net rental yield to compare income relative to property price.
Income breakdown
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How rental property returns work
Rental yield measures how much income a property generates relative to its price, making it one of the quickest ways to compare deals across markets. It is expressed as a percentage and comes in two forms: gross yield and net yield. Gross yield is the simplest version. It divides total annual rent by the property price and ignores all expenses. The formula is gross yield = (monthly rent × 12) divided by property price, times 100. Because it does not account for vacancy, taxes, insurance, or maintenance, gross yield is a rough screening tool — useful for ranking properties quickly but not for making a final decision. Net yield goes one step further by subtracting annual operating expenses before dividing by price. The formula is net yield = ((monthly rent × 12) minus annual operating expenses) divided by property price, times 100. Net yield gives you a more realistic picture of the income a property produces, though it still excludes financing costs and is not the same as cash-on-cash return. Rental yield is most valuable as a comparison metric. If two properties cost the same but one has a 9% gross yield and the other 6%, the first generates more rent per dollar of price. But a high yield can also signal a riskier market — properties in distressed areas often have high yields because values are low and tenant turnover is high. A reasonable gross yield in many US markets falls between 7% and 12%, while net yield typically runs 4% to 8% after expenses. In high-cost coastal markets, both numbers are often lower because property values are high relative to rents. Use yield alongside cap rate and cash-on-cash return to build a complete picture of any deal before you invest.
Worked example
You are comparing a condo listed at $210,000 that rents for $1,850 per month. Annual gross rent is $1,850 × 12 = $22,200.
Gross yield = $22,200 / $210,000 × 100 = 10.6%. That looks attractive on its own, but you need to account for expenses.
Annual operating expenses are property tax $2,800, insurance $900, maintenance $1,500, property management $1,776 (8% of gross rent), and HOA $1,800. Total operating expenses are $8,776.
Net yield = ($22,200 − $8,776) / $210,000 × 100 = $13,424 / $210,000 × 100 = 6.4%. The gross yield looked strong, but after expenses the net yield is more modest — a reminder to always check both numbers before deciding a deal is a winner.
Frequently asked questions
What is the difference between gross yield and net yield?
Gross yield divides total annual rent by property price and ignores expenses. Net yield subtracts annual operating expenses before dividing by price. Gross yield is a quick screening tool; net yield is more realistic because it accounts for the cost of running the property.
What is a good rental yield?
In many US markets, a gross yield of 7–12% and a net yield of 4–8% are typical. In high-cost coastal markets, both are often lower because property values are high relative to rents. There is no universal "good" number — yield is best used to compare properties in the same market.
Does rental yield include the mortgage payment?
No. Rental yield, like cap rate, is an unlevered metric — it does not account for financing. To see the return on your cash after the mortgage, use cash-on-cash return instead. Yield tells you about the property; cash-on-cash tells you about your investment structure.
Why is my gross yield high but net yield low?
That usually means operating expenses are a large share of rent. High property taxes, HOA fees, or management costs can eat into income. A high gross yield can also signal a riskier market where expenses or vacancy are higher than average. Always check net yield before judging a deal.
How is rental yield different from cap rate?
They are closely related. Gross yield uses gross rent divided by price. Cap rate uses net operating income (rent minus vacancy and operating expenses) divided by price. Cap rate is essentially a more complete version of net yield because it also accounts for vacancy.
More Deal Analysis tools
- Rental Property Calculator Analyze cash flow, cash-on-cash return, cap rate, and GRM for any rental property.
- Cap Rate Calculator Calculate net operating income and capitalization rate for any rental property.
- Cash-on-Cash Return Calculator Measure the annual return on the actual cash you put into a rental property deal.
- Gross Rent Multiplier Calculator Screen deals fast with the gross rent multiplier and implied price at a target GRM.
- 1% Rule Calculator Check whether a rental deal meets the 1% rule and see the rent needed to pass.
- ARV Calculator Estimate after-repair value and maximum allowable offer for a fix-and-flip or BRRRR deal.