About Rental Yield Calculator
Real estate is a business, and like any business, it boils down to Return on Investment (ROI). For landlords, the primary metric of success is Rental Yield. It measures the annual return generated by a property as a percentage of its value. This number allows investors to instantly compare the profitability of a $100k condo in Ohio vs. a $1M flat in London.
Gross vs. Net Yield
- Gross Yield: The "Back of the napkin" calculation.
(Annual Rental Income / Property Value) * 100. It gives a quick snapshot of market potential but ignores the reality of ownership costs. - Net Yield: The "True" calculation. It deducts all operating expenses (Maintenance, Taxes, HOA fees, Insurance, Vacancy reserve) from the income before dividing by the total cost (Purchase Price + Closing Costs + Reno). This is the number you can actually spend.
What is a "Good" Yield?
This is subjective and market-dependent. In high-growth value areas (like Tier 1 cities), investors accept lower yields (3-4%) because they bank on the property value doubling over 10 years (Capital Appreciation). In stagnant or cash-flow markets, investors demand higher yields (8-12%) because the property value might not increase much. A yield below 2-3% suggests the property is losing money effectively when accounting for inflation.
Using the Tool
Input your Monthly Rent and the Property Purchase Price to get an instant Gross Yield percentage. Use this to filter out bad deals quickly before doing a deep dive into the expenses.