Rental Yield Calculator
Estimate gross and net rental yield for an investment property. Model rent, vacancy, expenses, and growth assumptions to see how your returns evolve over time and whether a property fits your long-term strategy.
Rental yield formulas
Rental yield is one of the simplest ways to compare investment properties. It tells you how much income a property generates relative to its value. This calculator uses transparent formulas to estimate both gross and net yield, then projects them over time using your growth assumptions.
1. Effective annual rent
Annual rent (before vacancy):
R_annual = R_monthly × 12
Effective annual rent (after vacancy):
R_eff = R_annual × (1 − v ÷ 100)
Where:
R_monthly = monthly rent
v = vacancy rate (%)
Vacancy reduces the rent you actually collect. A 5% vacancy rate means you expect to be empty about 5% of the year on average.
2. Gross rental yield
Gross yield:
Y_gross = (R_eff ÷ V) × 100
Where:
V = property value or purchase price
Gross yield ignores expenses. It’s useful for quick comparisons, but it can overstate returns if costs are high.
3. Net rental income and net yield
Annual management cost:
C_mgmt = R_eff × (m ÷ 100)
Annual maintenance cost:
C_maint = V × (k ÷ 100)
Total expenses:
C_total = E + C_mgmt + C_maint
Net income:
I_net = R_eff − C_total
Net yield:
Y_net = (I_net ÷ V) × 100
Where:
E = annual operating expenses (taxes, insurance, HOA, etc.)
m = management fee (% of rent)
k = maintenance (% of property value)
Net yield subtracts operating costs, management, and maintenance from rent. It gives a more realistic picture of what the property might actually earn before financing and taxes.
4. Growth and multi-year projection
Rent growth:
R_eff,Y = R_eff × (1 + g_r)^(Y − 1)
Expense growth:
C_total,Y = C_total × (1 + g_e)^(Y − 1)
Net income in year Y:
I_net,Y = R_eff,Y − C_total,Y
Net yield in year Y:
Y_net,Y = (I_net,Y ÷ V) × 100
Where:
g_r = annual rent growth (decimal)
g_e = annual expense growth (decimal)
Y = year number
By applying growth assumptions to rent and expenses, the calculator shows how net yield might change over time. This is helpful for long-term holds where rent and costs rarely stay flat.
These formulas are intentionally simple and transparent. You can adjust each input—rent, vacancy, expenses, management, maintenance, and growth—to reflect your own expectations and risk tolerance. The goal is not to predict the future perfectly, but to give you a grounded framework for comparing properties and planning your strategy.
Understanding rental yield in real life
Rental yield looks deceptively simple: take the rent, divide by the property value, and you have a percentage. In practice, though, the story is more nuanced. Vacancy, operating expenses, management fees, and maintenance all eat into your returns. This calculator is designed to make those moving parts visible so you can make more grounded decisions.
Start with the basics: property value and monthly rent. Converting rent to annual income and adjusting for vacancy gives you effective rent—the amount you realistically expect to collect. From there, gross yield is just effective rent divided by property value. Many investors use this as a quick screening metric, but it’s only the first layer.
From gross yield to net yield
Net yield is where the real story begins. Operating expenses such as property taxes, insurance, HOA fees, and utilities can be substantial. Management fees, if you use a professional manager, typically run 8–10% of rent. Maintenance, whether handled directly or through reserves, is another ongoing cost that can’t be ignored.
By subtracting these costs from effective rent, the calculator estimates net income and net yield. This number is often much lower than gross yield, but it’s closer to what you can actually use to cover financing, build reserves, or pay yourself. Seeing both gross and net yield side by side can be eye-opening, especially for properties with high expenses.
Worked example
Imagine a property worth $350,000 that rents for $2,200 per month. Annual rent is $26,400. With a 5% vacancy rate, effective rent is $25,080. Gross yield is about 7.17%.
Now add expenses: $6,000 per year for taxes, insurance, and HOA; an 8% management fee; and 1.5% of property value for maintenance ($5,250). Management costs are about $2,006 per year, bringing total expenses to roughly $13,256. Net income is $11,824, and net yield is about 3.38%.
That gap between 7.17% gross and 3.38% net is the difference between a property that looks great on paper and one that reflects reality. The calculator makes that gap explicit so you can decide whether the property still fits your goals.
Thinking in timelines, not snapshots
Real estate is a long-term game. Rents may rise, but so do expenses. The year-by-year timeline in this tool applies your growth assumptions to both sides of the equation. You can see how net yield might change over five, ten, or fifteen years, and whether the trend is improving or eroding.
For example, if rent grows at 2.5% per year while expenses grow at 2%, net yield may slowly improve. If expenses grow faster than rent, net yield can compress over time. Seeing that trajectory can influence whether you plan to hold, refinance, or eventually exit a property.
Practical tips
- Use conservative assumptions for vacancy and expenses, especially in markets with older housing stock or strict regulations.
- Compare net yield to your financing costs and alternative investments, not just to other properties.
- Revisit your inputs annually as you learn more about actual rent, expenses, and maintenance patterns.
- Export the CSV and track real numbers against your plan to refine your assumptions over time.
Rental yield is not the only metric that matters—cash flow, appreciation, and risk all play roles—but it’s a powerful lens. When you see the numbers laid out clearly, it becomes easier to decide whether a property belongs in your portfolio or whether your capital might be better deployed elsewhere.
Frequently Asked Questions
Should I use purchase price or current value?
For new acquisitions, use purchase price. For properties you already own, using current market value can help you evaluate whether the property still earns an attractive yield relative to its opportunity cost.
How do I estimate vacancy?
Look at local market data, talk to property managers, and consider your tenant profile. Many investors use 5–8% as a starting point, then adjust based on experience and location.
What counts as operating expenses?
Operating expenses typically include property taxes, insurance, HOA fees, utilities you pay as the owner, and any recurring costs tied to the property. Mortgage payments and income taxes are separate and not included in this tool.
Why separate maintenance from other expenses?
Maintenance is often lumpy and tied to property condition. Modeling it as a percentage of value helps you build reserves for big-ticket items like roofs and HVAC systems, rather than treating them as surprises.
Can I use this for short-term rentals?
You can, but be cautious. Short-term rentals often have higher gross rent and higher expenses. Adjust vacancy, management, and maintenance assumptions to reflect the reality of your specific operation.
Can I export the yield timeline?
Yes. Use the Export CSV button to download the year-by-year yield schedule. You can import it into a spreadsheet, compare scenarios, or share it with a financial planner or partner.
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Information on this site is for educational purposes only and is not financial, tax, or legal advice. Calculations are estimates and may not reflect actual results. See our Privacy Policy and Disclaimer.