Rental Yield Calculator
Rental yield is the standard way to compare rental properties. It expresses the rent a property generates as a percentage of its value, the way an interest rate describes a savings account. This calculator gives you gross yield (before costs), the quick screening number agents quote, and net yield (after running costs), which is closer to what lands in your pocket.
Use the purchase price to measure the return on your original investment, or the current market value to judge whether the property still earns its keep compared with selling and investing elsewhere.
Gross and net yield formulas
Gross yield = (Monthly rent × 12) ÷ Property value × 100
Net yield = (Annual rent − Annual costs) ÷ Property value × 100
Costs to count for the net figure: management fees (often 8–12% of rent), landlord insurance, maintenance and repairs (a common allowance is 1% of property value per year), property taxes or service charges, and a vacancy allowance of 2–4 weeks of lost rent per year. Mortgage interest is excluded on purpose. Yield measures the property; financing measures the deal.
Worked example
A $300,000 property renting for $1,500/month with $3,600 of annual running costs:
| Annual rent | $1,500 × 12 = $18,000 |
|---|---|
| Gross yield | $18,000 ÷ $300,000 = 6.0% |
| Net yield | ($18,000 − $3,600) ÷ $300,000 = 4.8% |
| Net income | $1,200 / month |
That 1.2-point gap between gross and net is typical. Running costs commonly absorb 20–30% of rent, so two listings with the same gross yield can have very different net yields.
What counts as a good rental yield?
It varies by market. Gross yields of 5–8% are generally considered healthy in much of the US, UK and Australia. Prime big-city areas often run 3–5%, where investors are betting on price growth. Cheaper regional markets can exceed 8–10% with more management effort and risk. Yield is only half the return. Total return adds capital growth, and high-yield areas often grow slower.
Before buying, pressure-test the deal: what does the net yield look like with one month's vacancy and a big repair in the same year? A deal that only works in the best case is not a deal. The rent vs buy calculator covers the owner-occupier side.
Frequently asked questions
What is the difference between gross and net rental yield?
Gross yield uses the full annual rent. Net yield subtracts running costs first: management, insurance, maintenance, taxes and an allowance for empty periods. Net is the better decision number. Gross is fine for a first screen of listings.
Is a 7% rental yield good?
A 7% gross yield is above average in most English-speaking markets and usually means decent cash flow. Check what drives it. Very high yields sometimes reflect low prices in areas with weak tenant demand or looming maintenance, which is risk dressed up as return.
Should I use the purchase price or the current value?
Purchase price shows the return on the money you actually invested ("yield on cost"). Current value shows whether the capital tied up today is working hard enough compared with alternatives, which is the better basis for a hold-or-sell decision.
Does rental yield include mortgage payments?
No. Yield describes the property itself, independent of financing. To judge a leveraged deal, investors use cash-on-cash return: annual net cash flow after mortgage payments, divided by the cash actually invested (deposit plus costs).
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This calculator is for general information and education only. It is not professional advice. Confirm important decisions with a qualified adviser.