Rental Yield Calculator
Evaluate the income performance of any real estate investment property. By comparing annual rental revenue against property acquisition price, maintenance, property taxes, insurance, and vacancy rates, this tool computes both gross and net rental yields (capitalization rate) in seconds.
Total acquisition cost or current market value of investment property
Gross monthly rental payment collected from tenants
Property taxes, insurance, repairs, HOA, and property management fees
Allowance for tenant turnover and unrented periods (typical 5% to 8%)
Annual Net Operating Income (NOI) divided by property purchase price
How to Use This Calculator
- Enter the purchase price or current market value of your rental property.
- Enter anticipated monthly tenant rent.
- Enter total annual operating expenses (property taxes, hazard insurance, repairs, management fees).
- Set your local market vacancy rate (typically 5% for high-demand cities).
- Examine both Gross Yield and Net Yield to benchmark against other investment assets.
Formula & Calculation Methodology
Gross rental yield divides 12 months of scheduled rent by the acquisition price. Net rental yield (capitalization rate) subtracts vacancy allowances and operating expenses (taxes, insurance, maintenance, management) from gross rent before dividing by purchase price.
Worked Example
A $320,000 duplex yielding $2,200/mo rent with $6,500 annual expenses and 5% vacancy
Frequently Asked Questions
What is considered a "good" net rental yield?↓
In prime metropolitan residential real estate, net rental yields typically range between 4% and 7%. In smaller regional or tertiary markets with lower price-to-rent ratios, yields often reach 8% to 10% to compensate for slower capital appreciation.
Does net rental yield include mortgage payments (debt service)?↓
No. Net rental yield is identical to capitalization rate (Cap Rate) and measures the unleveraged income performance of the asset itself regardless of whether purchased for all cash or financed with debt.
What is the "1% Rule" in real estate screening?↓
The 1% rule suggests that a rental property monthly rent should equal at least 1% of its purchase price (e.g. $2,000/mo on a $200,000 property). Properties meeting the 1% rule generally produce healthy positive cash flow.
What limitation should I consider regarding capital expenditures (CapEx)?↓
Operating expenses cover routine annual maintenance. Long-term capital replacements (such as a $12,000 roof replacement every 20 years or $6,000 HVAC unit) should be accounted for via an additional 5% to 10% CapEx reserve.
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Open calculator →Source Citation & Disclaimer
Informational tool only; not licensed tax, legal, or financial advice.