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Rental Yield Calculator

Calculate gross and net rental yield for investment property

Net Rental Yield

4.79%

Gross Yield

8.57%

Net Income

$17,100

Expense Ratio

40.0%

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Net Rental Yield

4.79%

Gross Yield

8.57%

Monthly Net

$1,425

Annual Net Income

$17,100

Expense Ratio

40.0%

Yield Comparison

Gross Yield8.57%
Net Yield4.79%

Difference of 3.78 percentage points lost to operating expenses

Income & Expense Breakdown

Annual Gross Rent$30,000
Effective Rent (after vacancy)$28,500
Insurance-$1,800
Property Taxes-$4,200
Maintenance-$3,000
Management-$2,400
= Net Rental Income$17,100/yr

Frequently Asked Questions

Q

How do you calculate rental yield?

Gross Rental Yield = (Annual Rent / Property Price) x 100. Net Rental Yield = (Annual Rent - Expenses) / (Price + Acquisition Costs) x 100. For a $350,000 property renting at $2,500/month: Gross = $30,000 / $350,000 = 8.57%.

  • Gross yield uses total rent before any deductions
  • Net yield subtracts all operating expenses and vacancy
  • Net yield denominator includes acquisition costs (stamp duty, legal)
  • Gross yield is always higher than net yield
  • Example: $30,000 rent / $350,000 price = 8.57% gross yield
MetricFormulaExample ($350K property, $2,500/mo)
Gross YieldAnnual Rent / Price8.57%
Net Yield(Rent - Expenses) / Total Cost5.18%
Q

What is a good rental yield?

Good gross rental yield is typically 5-8%, and good net yield is 3-6%. In expensive markets (London, NYC), 3-4% gross may be normal. In secondary markets, 8-12%+ gross is achievable. Always compare net yield since expenses vary significantly.

  • Net yield above 5% is generally considered good
  • High yield markets often have lower capital growth
  • Factor in vacancy: 5-10% of gross rent typical
  • Management costs: 8-12% of rent if using an agent
  • Maintenance: budget 1% of property value annually
Market TypeGross YieldNet YieldStrategy
Prime city center3-5%1-3%Capital growth
Suburban metro5-7%3-5%Balanced
Secondary city7-10%5-7%Income focus
Regional/rural8-12%5-8%High yield
Q

What is the difference between gross and net rental yield?

Gross yield uses total rent and purchase price only. Net yield deducts operating expenses (insurance, taxes, maintenance, management, vacancy) from rent and adds acquisition costs to the purchase price. Net yield is typically 2-4 percentage points lower.

  • Gross yield is quick to calculate but overstates returns
  • Net yield is more accurate but requires expense data
  • The gap between gross and net reveals expense burden
  • Expense ratio above 40% signals high-cost property
ComponentGross YieldNet Yield
Rental incomeFull annual rentAfter vacancy deduction
ExpensesNot includedAll operating costs
Purchase costPrice onlyPrice + acquisition costs
AccuracyQuick estimateRealistic return
Q

What expenses should I include in net yield calculation?

Include property taxes, building insurance, maintenance and repairs, property management fees, vacancy allowance, and any recurring costs. Exclude mortgage payments (that is debt service, not operating expense) and capital improvements.

  • Property taxes: $2,000-$10,000/year depending on location
  • Insurance: $1,000-$3,000/year for single-family
  • Maintenance: 1-2% of property value per year
  • Management: 8-12% of collected rent
  • Vacancy: 5-10% of gross rent
Q

How does vacancy rate affect rental yield?

A 5% vacancy rate on $2,500/month rent reduces annual income from $30,000 to $28,500, losing $1,500. On a $350,000 property, this drops gross yield from 8.57% to 8.14%. In areas with high turnover, vacancy can exceed 10%.

  • 5% vacancy = roughly 18 days empty per year
  • 10% vacancy = roughly 36 days empty per year
  • Student rentals: higher vacancy during summer months
  • Long-term tenants: lower vacancy but possibly below-market rent
  • Factor in turnover costs: cleaning, painting, listing fees

Example Calculations

1$350,000 Property Renting at $2,500/month

Inputs

Purchase Price$350,000
Monthly Rent$2,500
Vacancy Rate5%
Annual Expenses$11,400
Acquisition Costs$7,000

Result

Net Rental Yield4.79%
Gross Yield8.57%
Annual Net Income$17,100
Expense Ratio40.0%

Annual rent = $2,500 x 12 = $30,000. Effective rent = $30,000 x 0.95 = $28,500. Expenses = $1,800 + $4,200 + $3,000 + $2,400 = $11,400. Net income = $28,500 - $11,400 = $17,100. Gross yield = $30,000 / $350,000 = 8.57%. Net yield = $17,100 / ($350,000 + $7,000) = 4.79%. Expense ratio = $11,400 / $28,500 = 40.0%.

2$220,000 Property Renting at $1,800/month

Inputs

Purchase Price$220,000
Monthly Rent$1,800
Vacancy Rate8%
Annual Expenses$7,200
Acquisition Costs$4,400

Result

Net Rental Yield5.65%
Gross Yield9.82%
Annual Net Income$12,672
Expense Ratio36.2%

Annual rent = $1,800 x 12 = $21,600. Effective rent = $21,600 x 0.92 = $19,872. Expenses = $7,200. Net income = $19,872 - $7,200 = $12,672. Gross yield = $21,600 / $220,000 = 9.82%. Net yield = $12,672 / ($220,000 + $4,400) = 5.65%. Expense ratio = $7,200 / $19,872 = 36.2%.

Formulas Used

Gross Rental Yield

Gross Yield = (Annual Rent / Purchase Price) x 100

Quick measure of rental return using gross rent and property price, before any expense deductions.

Where:

Gross Yield= Annual gross return percentage
Annual Rent= Monthly rent x 12 (before vacancy)
Purchase Price= Property purchase price

Net Rental Yield

Net Yield = (Annual Rent - Expenses) / (Price + Acquisition Costs) x 100

Realistic measure of rental return after operating expenses and including all acquisition costs.

Where:

Net Yield= Annual net return percentage
Annual Rent= Effective annual rent (after vacancy)
Expenses= Annual insurance, taxes, maintenance, management
Acquisition Costs= Legal fees, stamp duty, surveys

Understanding Rental Yield for Property Investment

Rental yield measures the annual return from rental income relative to the cost of the property. It is the first metric most property investors check when evaluating a potential buy-to-let investment.

Our calculator computes both gross and net rental yield, breaking down every expense category. The expense ratio reveals what percentage of your rent goes to operating costs versus profit.

Use net yield to compare properties fairly. A property with higher gross yield but also higher expenses may produce less actual income than a lower-yield property with minimal costs.

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Vacancy Rate Calculator

Calculate physical and economic vacancy rates for your rental property or portfolio. Project annual income loss and see how vacancy impacts your returns.

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Last Updated: Mar 25, 2026

This calculator is provided for informational and educational purposes only. Results are estimates and should not be considered professional financial, medical, legal, or other advice. Always consult a qualified professional before making important decisions. UseCalcPro is not responsible for any actions taken based on calculator results.

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