Rental yield is the single most important number that tells you whether a property will pay you back. It compares the annual rent a home produces to the price you pay for it, expressed as a percentage. A 5% yield on a $400,000 house means the property throws off $20,000 of rent each year before expenses. This calculator works out both the gross rental yield — the raw rent-to-price ratio — and the net rental yield after you subtract typical operating costs, so you can compare two properties side by side on the numbers that actually matter.
Slide in the purchase price, the monthly rent you expect to collect, and an expenses percentage, and every figure updates instantly. It takes ten seconds to tell whether a "great deal" listing in one neighborhood is really a worse investment than a modest duplex two miles away.
How to Use
- Enter the Property Value — the price you would pay today, including any purchase costs you intend to fold into the basis. If you are comparing an existing holding, use its current market value rather than what you paid years ago.
- Set the Monthly Rent you realistically expect to collect. Look at comparable listings on Zillow, Apartments.com, or local letting agents rather than the seller's optimistic figure. For a portfolio, sum the monthly rents and use the combined total against the combined property value.
- Adjust the Annual Expenses slider to reflect how much of the rent disappears each year. The default of 30% is a common starting point for a mid-sized US single-family rental and already covers vacancy, property tax, landlord insurance, property management, and routine maintenance.
- Read the result card. Gross Rental Yield is the top-line headline number brokers quote; Net Rental Yield is the one that survives contact with your bank account.
The formula is deliberately simple. Annual rent is the monthly rent multiplied by twelve. Divide that annual figure by the property value and multiply by 100 to get the gross yield. Then subtract your expenses percentage from 100%, multiply by the annual rent to get net operating income, and divide by the property value again for the net yield. If you ever need to do the math on the back of a napkin, that is the entire calculation.
What Counts as a Good Yield?
Yield benchmarks move with city and asset class, but rough rules of thumb survive across most US markets:
- Above 8% gross is a strong yield, typical of smaller midwestern or southern cities where home prices are soft but demand for rentals stays steady.
- 5%–8% gross is the balanced middle, common in solid mid-tier metros with diversified job markets.
- 3%–5% gross is coastal / major-city territory (San Francisco, New York, Honolulu) where appreciation, not cash flow, drives the return.
- Below 3% gross rarely pencils out as a cash-flow play unless you expect very strong appreciation or you bought at a deep discount.
The net yield story matters just as much. A property showing an 8% gross yield but carrying 5% of expenses in property tax alone leaves only 3% in your pocket — worse than a well-managed 6% gross with 20% expenses. Always compare net yields, never gross yields in isolation.
Gross vs Net Yield: Why the Gap Matters
Gross yield is calculated before any costs. It is the number landlords use in advertisements, and it is the number that looks best. Net yield strips out the recurring operating expenses: vacancy between tenants, property tax, landlord insurance, property management fees (usually 8%–12% of collected rent), maintenance and repairs, landscaping, and any HOA dues.
On a $400,000 property renting for $2,500 a month, the annual rent is $30,000 and the gross yield is 7.5%. Apply a 30% expense ratio and the net operating income drops to $21,000, which is a net yield of 5.25%. The gap between 7.5% and 5.25% — 2.25 percentage points — is the annual cost of actually being a landlord. On a leveraged deal, that gap widens further once the mortgage payment itself is layered in; rental yield does not include debt service, so pair this calculator with a mortgage tool if you are financing the purchase.
Examples
Example 1 — The textbook case. A duplex listed at $400,000 leases both units for $2,500 a month combined. Annual rent is $30,000, gross yield is 7.5%, and after a 30% expense load the net yield is 5.25%. This is a balanced mid-market cash-flow property.
Example 2 — A million-dollar coastal condo. A beachfront condo priced at $1,500,000 commands $6,000 a month in peak-season rent. Annual rent is $72,000, gross yield is only 4.8%, and after a 25% expense ratio the net yield shrinks to 3.6%. The buyer here is really underwriting future appreciation and lifestyle, not cash flow.
Example 3 — A working-class single-family home. A tidy house in a rust-belt metro priced at $350,000 rents for $2,200 a month. Annual rent is $26,400, gross yield is about 7.54%, and with a lighter 20% expense load the net yield comes in near 6.03%. Even though the absolute rent is lower, the net yield beats the coastal condo by a wide margin.
Example 4 — Zero-rent vacancy test. If you are modeling a unit sitting empty between tenants, set monthly rent to 0. The calculator correctly returns a 0% gross and net yield, confirming that a vacant property produces no return at all — which is why vacancy reserve planning is non-negotiable.
FAQ
How do you calculate gross rental yield?
Multiply the monthly rent by 12 to get annual rental income, then divide by the property value and multiply by 100. On a $400,000 property with $2,500 monthly rent: (2,500 × 12) ÷ 400,000 × 100 = 7.5%. That is the gross rental yield.
What is a good gross rental yield?
In most US markets, a gross yield between 5% and 8% is considered healthy. Yields above 8% typically signal a stronger cash-flow market but may come with higher maintenance or tenant risk. Yields below 4% are common in expensive coastal cities where investors are betting on appreciation rather than annual cash flow.
Gross yield vs net yield — which should I use?
Gross yield is a quick headline for screening many listings at once, but net yield is the number that matches what actually lands in your bank account. Always decide on a deal using net yield after vacancy, tax, insurance, management, and maintenance. Use this calculator's Net Rental Yield line for your final comparison.
What expenses should I include in the expenses percentage?
Budget for vacancy (often 5%–10% of rent), property tax, landlord insurance, property management (typically 8%–12% of rent), maintenance and repairs (5%–10%), landscaping, pest control, HOA dues, and reserves for capital expenses like a new roof or HVAC. A default of 30% of collected rent is a reasonable middle-of-the-road assumption.
Does rental yield include my mortgage?
No. Rental yield measures the return on the property itself, independent of financing. If you use a mortgage, your actual cash-on-cash return will be different — usually higher when leverage is cheap and the rent covers the payment, lower when rates spike. Pair this calculator with a mortgage and a cash-on-cash return tool for the full picture.
How does purchase cost affect the yield?
The yield is anchored to the price you pay, so closing costs, repairs, and initial capital improvements lower the effective yield if you fold them into your basis. If you pay $400,000 plus $20,000 in closing and $15,000 in renovation, your real invested capital is $435,000, and on $30,000 of annual rent the yield drops to 6.9%. Enter your total invested cost as the Property Value to stay honest.
Can I use this for a whole rental portfolio?
Yes. Sum every property's market value in one field and sum every monthly rent in the other, then set a blended expenses ratio. The result is the portfolio's aggregate gross and net yield, which is the number lenders and your accountant care about when sizing a refinance or a new acquisition.
Disclaimer
This gross rental yield calculator is provided for informational purposes only and does not constitute financial, investment, tax, or legal advice. Yield estimates are based on the inputs you enter and the standard industry formula; actual rents, vacancy, expenses, and appreciation vary by market, property condition, and tenant mix. Always run your own due diligence, confirm local taxes and insurance quotes, and consult a licensed real-estate or tax professional before purchasing an investment property.