Rental Yield Calculator United States

Rental yield expresses the rent a property produces as a percentage of what it is worth, so you can compare a duplex in Ohio with a condo in Florida regardless of price. This rental yield calculator gives two numbers: the gross yield, based on rent alone, and the net yield, after the running costs of owning the place.

How rental yield works

If a property is worth $300,000 and rents for $2,000 a month, it produces $24,000 of rent a year. Divide the annual rent by the property value and you get a gross yield of 8 percent, which tells you how much rent each dollar of property value earns.

Yield does not depend on how you pay for the property. It measures the return on the asset, not on the cash you put down, so a cash buyer and a financed buyer looking at the same house get the same yield. That makes it a useful first screen; financing, cash flow and appreciation come after.

Gross versus net yield

Gross yield makes every property look better than it is, because it treats the home as costing nothing to hold. An investment property carries property taxes, landlord insurance, repairs, and often HOA or condo dues and management fees. Net yield accounts for them.

Take the same $300,000 property renting at $2,000 a month. Suppose the annual running costs (taxes, insurance, maintenance and HOA) come to $3,000. Subtract that from the $24,000 of rent and you are left with $21,000. Divided by the property value, that is a net yield of 7 percent, a full point below the gross figure.

The larger the running costs relative to rent, the wider the gap. In markets with high property taxes or steep HOA fees, a property that looks strong on gross yield can look ordinary once costs are counted.

What to include in running costs

Include every recurring cost of holding the property except the mortgage: property taxes, landlord or hazard insurance, routine maintenance and repairs, HOA or condominium dues, property management if you use it, and a vacancy allowance for the weeks the unit sits empty between tenants. Leaving costs out only makes the property look better on paper. If it still meets your target after generous cost estimates, that is a good sign.

A worked example

Suppose you are comparing two listings, both priced at $250,000. The first rents for $1,500 a month with $2,000 of annual costs. Its annual rent is $18,000, giving a gross yield of 7.2 percent and, after costs, a net yield of 6.4 percent. The second rents for the same $1,500 but sits in an HOA community with $6,000 of annual dues and higher taxes. Its gross yield is the same, but its net yield drops sharply once those costs come out, so the first is the stronger income property.

Assumptions and limitations

This is a screening tool, not a full investment model. Every figure it uses is one you enter (property value, monthly rent and annual running costs), so the result is only as accurate as your inputs.

It excludes the mortgage, so it does not show your cash flow or cash-on-cash return; a heavily financed property can have a healthy yield and still lose money each month. It assumes rent is collected in full every month, so build a vacancy and non-payment allowance into the running costs. It does not project rent increases, cost inflation or capital appreciation, which can matter more than yield over a long hold, and it does not account for tax on rental income or depreciation. Use it to shortlist properties, then run a full cash-flow and financing analysis on the ones you are serious about.

About This Rental Yield Calculator

Use this rental yield calculator to get an instant estimate based on the figures you enter. Adjust the inputs above to match your situation, or browse all our calculators to plan your next step.