Answer first
What this calculator tells you
Calculate gross and net rental yield from price, annual rent and expenses. Compare rental properties on the income they return per dollar of price. Formula: Gross yield = annual rent ÷ price × 100; net yield = (annual rent − annual expenses) ÷ price × 100. At the worked-example inputs, the gross rental yield is 8.3%. Holding every other input steady, moving property price from $256,000 to $384,000 moves the result from 6.9% to 10.3%.
Transparent method
The formula
Compare rental properties on the income they return per dollar of price.
Worked example
Example inputs
How to interpret the result
Rental yield is the income a property returns for its price. Rent of $26,400 on a $320,000 home is a gross yield of 8.25 percent. Take out $8,200 a year for taxes, insurance, upkeep and vacancy and the net yield falls to about 5.7 percent. The gap between the two is why gross yield alone flatters a property and why two listings with the same rent can differ a lot.
At the worked-example inputs the gross rental yield is 8.3%. It rises with annual rent and falls as property price increases; annual expenses does not move it.
Actual vacancy, maintenance, financing, taxes and local law may differ.
Before you rely on it
What to check
Include a vacancy allowance and a repair budget in the expenses. A net yield that assumes every month is rented and nothing breaks is a best case.
The common error
Where people go wrong with rental yield calculator
Comparing a gross yield with a mortgage rate. Yield ignores financing and costs, so it says little about what you would actually earn after the loan.
Sensitivity evidence
How property price changes the gross rental yield
Holding every other input at the worked-example value, moving property price from $256,000 to $384,000 moves the gross rental yield from 6.9% to 10.3%: a spread of 3.4%, or 42% of the worked-example result.
| Property price | Gross rental yield | Net rental yield |
|---|---|---|
| $256,000 | 10.3% | 7.1% |
| $288,000 | 9.2% | 6.3% |
| $320,000worked example | 8.3% | 5.7% |
| $352,000 | 7.5% | 5.2% |
| $384,000 | 6.9% | 4.7% |
Every input, tested
Which input moves the gross rental yield most
Of the 3 inputs, property price moves the gross rental yield most (1.7% across the range tested) and annual rent moves it least (1.6%). Annual expenses does not change it at all.
| Input | Tested from | To | Gross rental yield at each end | Swing |
|---|---|---|---|---|
| Property price | $288,000 | $352,000 | 9.2% to 7.5% | 1.7% (20%) |
| Annual rent | $23,760 | $29,040 | 7.4% to 9.1% | 1.6% (20%) |
| Annual expenses | $7,380 | $9,020 | 8.3% to 8.3% | none |
Two variables at once
Gross rental yield by property price and annual rent
Across the grid the gross rental yield runs from 5.5% to 12.4%. Moving property price from $256,000 to $384,000 shifts it by 3.4% at the middle column, and moving annual rent from $21,120 to $31,680 shifts it by 3.3% at the middle row, so property price is the bigger lever here.
| Property price \ Annual rent | $21,120 | $26,400 | $31,680 |
|---|---|---|---|
| $256,000 | 8.3% | 10.3% | 12.4% |
| $288,000 | 7.3% | 9.2% | 11.0% |
| $320,000 | 6.6% | 8.3% | 9.9% |
| $352,000 | 6.0% | 7.5% | 9.0% |
| $384,000 | 5.5% | 6.9% | 8.3% |
The highlighted cell is the worked example: 8.3%.
Step by step
The worked example, input by input
| Input | Value used | What it means |
|---|---|---|
| Property price | $320,000 | Enter the property price used in this calculation. |
| Annual rent | $26,400 | Enter the annual rent used in this calculation. |
| Annual expenses | $8,200 | Taxes, insurance, maintenance, management and vacancy allowance. Leave out the mortgage. |
| Gross rental yield | 8.3% | |
| Net rental yield | 5.7% | |
Inputs, definitions and assumptions
Property price
Enter the property price used in this calculation. The prefilled worked-example value is $320,000.
Annual rent
Enter the annual rent used in this calculation. The prefilled worked-example value is $26,400.
Annual expenses
Taxes, insurance, maintenance, management and vacancy allowance. Leave out the mortgage. The prefilled worked-example value is $8,200.
How to use this calculator
- 1Verify the inputs. Gather property price, annual rent and annual expenses from your own documents; the prefilled values are examples.
- 2Save a baseline. The worked example puts the gross rental yield at 8.3%. Store your own version of it as Scenario A.
- 3Test one change. Start with property price, the input with the biggest effect here: moving property price from $288,000 to $352,000 takes the gross rental yield from 9.2% to 7.5%, a swing of 20% of the worked-example figure.
- 4Check the extremes. At half the example property price ($160,000) the gross rental yield is 16.5%; at double ($640,000) it is 4.1%.
People also ask
Frequently asked questions
How do you calculate rental yield?
Gross yield = annual rent ÷ price × 100; net yield = (annual rent − annual expenses) ÷ price × 100. Enter property price in dollars, annual rent in dollars and annual expenses in dollars. At the worked-example inputs the gross rental yield is 8.3%.
What does the rental yield result mean?
Compare rental properties on the income they return per dollar of price. At the worked-example inputs the gross rental yield is 8.3%. It rises with annual rent and falls as property price increases; annual expenses does not move it.
How much does property price change the gross rental yield?
Holding every other input at the worked-example value, moving property price from $256,000 to $384,000 moves the gross rental yield from 6.9% to 10.3%, a spread of 3.4%.
What are the limits of this rental yield calculator?
Actual vacancy, maintenance, financing, taxes and local law may differ. The tables on this page test property price only from $256,000 to $384,000; a value outside that range is not tabulated here.
Which input moves the gross rental yield most in the rental yield calculator?
Ranked by how far each moves the gross rental yield across the range tested: property price (1.7%, 20%) and annual rent (1.6%, 20%). Annual expenses does not change it.
If I double property price in the rental yield calculator, does the gross rental yield double?
Doubling it from $320,000 to $640,000 takes the gross rental yield from 8.3% to 4.1%, which is 0.50 times the worked-example figure. So it falls instead of rising. Halving it to $160,000 gives 16.5%.
How much does annual rent matter in the rental yield calculator?
The worked example uses $26,400. Holding every other input at its worked-example value, moving annual rent from $23,760 to $29,040 takes the gross rental yield from 7.4% to 9.1%, a swing of 20% of the worked-example figure.
How much does annual expenses matter in the rental yield calculator?
The worked example uses $8,200. The gross rental yield does not depend on annual expenses; it moves the net rental yield from 5.9% to 5.4% instead when annual expenses goes from $7,380 to $9,020.
Which inputs change the net rental yield in the rental yield calculator?
At the worked-example inputs it is 5.7%. Property price takes it from 6.3% to 5.2%, annual rent takes it from 4.9% to 6.5% and annual expenses takes it from 5.9% to 5.4%.
What is a good cap rate for a rental property?
It is entirely market and asset-class dependent, so absolute thresholds are not meaningful. Read it relative to comparable properties in the same submarket and against the cost of debt. A high cap rate usually compensates for risk, illiquidity or weak growth instead of representing a bargain.
Sources and evidence
Free Calculators Online is independent and is not affiliated with or endorsed by the source organizations. Educational estimates only.