Property Yield Calculator
Calculate gross yield and net yield on rental property. Compare gross rental income percentage against property cost versus actual net income after all expenses.
Calculate gross yield (rental income as percentage of purchase price) and net yield (after all costs). See both the promised return and the actual return after expenses.
Formula
Gross Yield = (Annual Gross Rental Income ÷ Purchase Price) × 100 | Net Yield = ((Annual Rental Income − Annual Costs) ÷ Purchase Price) × 100 | Annual Costs = Mortgage Interest + Tax + Insurance + Maintenance + Management Fee
Yield measures annual income as a percentage of property cost. Gross yield shows the rental return before costs and appears more attractive, while net yield shows the actual return after accounting for all operating expenses. The gap between them reveals how much costs consume your rental income. Net yield is the metric to use for realistic investment evaluation.
Worked Example
$300,000 property, $1,500/month rent (5% vacancy), $16,400 annual costs.
Annual gross rent: $1,500 × 12 = $18,000
After 5% vacancy: $18,000 × 0.95 = $17,100
Annual costs: $16,400
Annual net income: $17,100 − $16,400 = $700
Gross yield: ($18,000 ÷ $300,000) × 100 = 6%
Net yield: ($700 ÷ $300,000) × 100 = 0.23%
This example shows a dramatic difference: the 6% gross yield looks attractive, but after costs, net yield is only 0.23% — barely beating a savings account. Operating costs consumed 96% of rental income.
Frequently Asked Questions
Use this in your workflow
After calculating property yield, use the Cap Rate Calculator to compare capitalization rates, or the Rental Property Calculator for detailed cash flow analysis. Browse all Free Business Calculators.
When to use this calculator
- →Quickly comparing rental income return across different properties
- →Evaluating whether a property meets your minimum yield threshold
- →Understanding the gap between gross rental income and actual net income
- →Screening properties before deeper financial analysis
Common mistakes in yield analysis
Using gross yield as your investment decision metric
A 6% gross yield looks attractive until you calculate net yield (perhaps 2%) after operating costs. Many new investors focus on gross yield and end up with unexpectedly low returns. Always use net yield for investment decisions.
Underestimating operating costs
Many investors budget only obvious costs (mortgage, tax, insurance) and forget maintenance, management, utilities, vacancy loss, and reserves for major repairs. Operating costs typically run 30–50% of rental income. Use realistic cost estimates.
Not adjusting for vacancy
A property that could rent for $2,000/month with 10% vacancy generates only $21,600 annual income, not $24,000. Vacancy reduces effective yield. Include a realistic vacancy assumption (3–10% depending on location and property type).
Confusing gross yield with cap rate
Gross yield ignores all costs; cap rate uses NOI (net income). A 6% gross yield might be a 3% cap rate after costs. Never confuse these metrics — cap rate is always lower and more realistic.
Ignoring taxes and financing in yield calculations
Yield calculations are pre-tax and exclude mortgage principal (which builds equity). Your actual cash return is lower after income tax and higher when you factor equity buildup. Yield is useful for comparison but is not your final measure of investment quality.
Disclaimer
Property yield is a simplified measure of investment return. This calculator does not account for financing costs, taxes, capital appreciation, or the time value of money. Actual rental property returns depend on location, tenant quality, maintenance, market cycles, and many other factors. This is for planning purposes only — not legal, tax, or financial advice. Consult a real estate professional and tax advisor before making investment decisions.
Frequently asked questions
What is gross yield?
Gross yield shows annual rental income as a percentage of the property purchase price, ignoring all costs. Formula: Gross Yield = (Annual Rental Income ÷ Purchase Price) × 100. A $300,000 property generating $18,000 annual rent has a 6% gross yield. Gross yield is useful for quick comparisons but overstates actual returns.
What is net yield?
Net yield shows annual net income (after costs) as a percentage of the property purchase price. Formula: Net Yield = ((Annual Rental Income − Annual Costs) ÷ Purchase Price) × 100. Net yield gives a realistic picture of actual cash return on your investment.
Why is there a big difference between gross and net yield?
Because operating costs (tax, insurance, maintenance, management) are substantial — often 30–50% of rental income. A 6% gross yield can become 2–3% net yield after costs. Always use net yield when evaluating investment viability.
What costs should I include?
Include all operating costs: mortgage interest (not principal), property tax, insurance, maintenance and repairs, management fees, and utilities you pay. Do not include mortgage principal (that is equity buildup) or capital expenditures separately (fold those into maintenance estimates).
How do gross and net yield compare to cap rate?
Net yield and cap rate are similar — both show net income as a percentage of property value. The difference: yield often includes financing costs in some definitions, while cap rate is the operational yield independent of debt. Use them together to evaluate property investments.