Gross rental yield tells you the headline number; net rental yield tells you whether the property actually makes money. This calculator takes the price you pay, the monthly rent you collect, and the actual dollar expenses you expect each year — property tax, insurance, management, maintenance, vacancy, and HOA — and works out the percentage of your purchase price that lands in your bank account after those costs. On a $400,000 home renting for $2,500 a month with $10,000 of annual expenses, the gross yield looks like 7.5%, but the net yield is only 5.0%. That 2.5-point gap is the real cost of being a landlord, and it is the number you should compare across listings.
Slide the three controls and every figure updates instantly. Unlike a percentage-expense tool, this one makes you budget real dollars, which forces you to look up the actual tax bill and insurance quote for the property rather than guessing a generic 30%.
How to Use
- Enter the Purchase Price — the total cost basis. Include the offer price plus closing costs and any upfront repair budget you are folding into the deal. If you already own the property and are checking its performance, use its current market value rather than what you paid years ago.
- Set the Monthly Rent you realistically expect to collect. Pull comparable listings on Zillow, Apartments.com, or local letting agents. Do not use the seller's projected rent; they are incentivized to overstate it.
- Type your Annual Operating Expenses in dollars. Add up: property tax, landlord insurance, property management (usually 8%–12% of collected rent), routine maintenance, landscaping, pest control, a vacancy reserve (commonly 5%–10% of rent), and any HOA dues. The default $10,000 is a reasonable starting point for a mid-sized US single-family rental.
- Read the result card. Gross Rental Yield is the headline number; Net Rental Yield is the after-expense return on your invested capital. Monthly Cash Flow shows how much surplus (or shortfall) you pocket each month before the mortgage payment.
The formula is deliberately transparent: annual rent is the monthly rent times twelve. Subtract your annual expenses to get net operating income (NOI). Divide NOI by the purchase price and multiply by 100 to get the net yield. The engine also reports the expense load as a percentage of rent so you can see immediately whether your cost stack is realistic.
Why Gross Yield Lies
Brokers and listing portals almost always quote gross yield because it is the flattering number. A property marketed at "7.5% yield" might actually be a 5.0% net yield once tax, insurance, and management are subtracted. On a leveraged purchase it gets worse: a 5% net yield with a 7% mortgage is a negative spread, meaning the rent does not even cover the debt service and you are subsidizing the property every month.
The gap between gross and net is what separates a cash-flow investment from a lifestyle purchase. Two properties with the same 7.5% gross yield can deliver wildly different returns once you adjust for a $6,000 annual tax bill in one state versus a $1,200 bill in another. That is why this calculator asks for dollars, not a percentage slider — the tax bill is a fixed number on the county assessor's site, and pretending it is a round 30% of rent hides the difference between cheap-ownership markets and expensive-ownership markets.
What Expenses to Budget
Before you type a single number, pull the actual figures. A defensible annual expense stack for a US single-family rental looks roughly like this:
- Property tax — check the county assessor's website; often 0.5%–2.5% of value per year.
- Landlord insurance — typically $1,000–$2,500 per year depending on location and flood zone.
- Property management — 8%–12% of collected rent if you outsource; $0 if you self-manage.
- Maintenance and repairs — 5%–10% of rent, plus a separate capital reserve for a roof, HVAC, or water heater over time.
- Vacancy reserve — 5%–10% of rent, reflecting the weeks between tenants.
- HOA, landscaping, pest control — add whatever applies to the specific property.
Skipping any of these lines flatters your net yield and sets you up for a surprise the first winter. A 5% net yield can turn into 3% after one roof replacement is amortized across the year.
Examples
Example 1 — The textbook case. A $400,000 single-family home rents for $2,500 a month. Annual rent is $30,000. Property tax runs $3,200, insurance $1,400, management $3,000, maintenance $1,500, vacancy reserve $900, and HOA $1,000 — about $10,000 in total. Net operating income is $20,000. The gross yield is 7.5%, the net yield is 5.0%, and the monthly cash flow before any mortgage is roughly $1,667. 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, but property tax alone is $12,000, insurance $2,400, HOA $6,000, management $7,200, and vacancy/maintenance $2,400 — about $30,000 of expenses. NOI is $42,000. Gross yield is 4.8%, net yield shrinks to 2.8%, and monthly cash flow is about $3,500. The buyer here is really underwriting appreciation and lifestyle, not cash flow.
Example 3 — A working-class single-family home. A tidy $350,000 house in a midwestern metro rents for $2,200 a month. Annual rent is $26,400. With lower taxes ($2,200), insurance ($1,000), management ($2,200), maintenance ($600), and vacancy ($0, since a self-managed local landlord absorbs turnover), total expenses come to about $6,000. NOI is $20,400. Gross yield is 7.54%, net yield is 5.83%, and monthly cash flow is about $1,700. Despite the lower absolute rent, the net yield beats the coastal condo by a wide margin.
Example 4 — The vacant unit 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 with negative cash flow equal to your annual expenses — confirming that a vacant property produces no return at all while still costing you money. That is why the vacancy reserve line is non-negotiable.
FAQ
How do you calculate net rental yield?
Subtract your annual operating expenses from the annual rent, then divide that net operating income by the purchase price and multiply by 100. On a $400,000 property with $2,500 monthly rent and $10,000 annual expenses: annual rent is $30,000, NOI is $20,000, and net yield is ($20,000 ÷ $400,000) × 100 = 5.0%.
What is a good net rental yield?
In most US markets, a net yield between 5% and 8% is considered healthy for a cash-flow-oriented investor. Yields above 8% typically signal a strong 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 tax, insurance, management, maintenance, and vacancy. Use the Net Rental Yield line on this page for your final comparison.
Does net 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.
What expenses should I include in the annual expenses field?
Budget for property tax, landlord insurance, property management (8%–12% of rent), maintenance and repairs (5%–10%), a vacancy reserve (5%–10%), landscaping, pest control, HOA dues, and a reserve for capital expenses like a new roof or HVAC. Enter the actual annual dollar totals from your quotes — not a percentage.
How does purchase cost affect the yield?
The yield is anchored to the total cost you invest, 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 $20,000 of annual NOI the net yield drops to 4.6%. Enter your total invested cost as the Purchase Price to stay honest.
Can I use this for a whole rental portfolio?
Yes. Sum every property's purchase price in one field, sum every monthly rent in the other, and enter the combined annual expenses. The result is the portfolio's aggregate net yield, which is the number lenders and your accountant care about when sizing a refinance or a new acquisition.
Disclaimer
This net 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 NOI formula; actual rents, vacancy, expenses, taxes, and appreciation vary by market, property condition, and tenant mix. Always run your own due diligence, confirm local tax and insurance quotes, and consult a licensed real-estate or tax professional before purchasing an investment property.