Rental Yield Calculator
Gross yield is the headline. Net yield is what you actually earn. This calculator shows both — net yield is the same metric as cap rate, framed for the rental investor.
Property Details
Gross yield ignores expenses; net yield is essentially cap rate.
50% rule is a common starting point. Range: 35–50%.
Yield Results
Rent ÷ Price
NOI ÷ Price (≈ cap rate)
Gross yield vs. net yield
Gross yield divides annual rent by purchase price. Quick to compute, useful for screening, but misleading on its own — two 10% gross yield properties can have wildly different cash returns.
Net yield divides NOI by price. NOI is gross rent minus operating expenses (taxes, insurance, vacancy, maintenance, capex, management). This is the apples-to-apples comparison number — and it’s identical to cap rate.
The formulas
Why net yield matters more
A high-tax state like New Jersey or Illinois can eat 2–3% of property value per year before you account for anything else. A property that screens at 9% gross yield in NJ might net only 4% after taxes and insurance — a number you can’t guess from the headline.
For a deeper version of this metric with rating thresholds and a market guide, see the Cap Rate Calculator.
Frequently asked questions
What is rental yield?
Rental yield is annual rent expressed as a percentage of property value. Gross yield uses gross rent; net yield uses NOI (after operating expenses) and equals the cap rate.
What’s the difference between gross and net yield?
Gross yield = (Annual Rent ÷ Price) × 100. Net yield = (NOI ÷ Price) × 100, where NOI is gross rent minus operating expenses. Gross yield is the headline; net yield is what you actually earn before financing.
Is rental yield the same as cap rate?
Net rental yield and cap rate are essentially the same metric (NOI ÷ price). The terminology differs by region — "yield" is more common in the UK and Europe, "cap rate" in North American commercial real estate.
What is a good gross rental yield?
Generally 6–10% gross. Below 6% means the property mostly depends on appreciation. Above 10% usually signals a high-cash-flow market with higher operating costs and risk. Always sanity-check with a net yield calculation.
Why do investors prefer net yield?
Net yield (cap rate) is what actually flows to the owner before debt. Two properties at 10% gross yield can have wildly different net yields based on tax rates, insurance, and management costs. Net yield is the apples-to-apples number.
Should I include vacancy in operating expenses?
Yes — typical underwriting includes a vacancy allowance (3–10% of gross rent depending on market) inside the operating expense ratio. The default 40% in this calculator already includes a 5% vacancy assumption.
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