Rental Yield Calculator: Gross and Net Yield on Investment Properties

Rental yield is the quickest way to compare investment properties — faster than cap rate, simpler than cash-on-cash. It's just your annual rental income expressed as a percentage of the property's value. Two minutes of math and you know if a deal is worth investigating further.

The CalcHub Rental Yield Calculator calculates both gross yield (before expenses) and net yield (after expenses) so you see the full picture.

Gross vs. Net Yield

Gross Rental Yield = (Annual Rent ÷ Property Value) × 100

Gross yield is the quick-and-dirty screen. It doesn't account for vacancy, expenses, or management fees — but it's useful for rapid comparison between properties.

Net Rental Yield = ((Annual Rent − Annual Expenses) ÷ Property Value) × 100

This is more meaningful. Expenses include: property taxes, insurance, management fees, maintenance, and vacancy allowance. Net yield is close to cap rate (which uses NOI) but calculated slightly differently.

Quick Example

Property A	Property B
Purchase price	$300,000	$450,000
Monthly rent	$1,800	$2,400
Annual rent	$21,600	$28,800
Gross yield	7.2%	6.4%
Annual expenses	$6,800	$9,200
Net yield	4.9%	4.4%

Property A wins on both measures despite being the cheaper option — not always obvious without running the numbers.

Yield Benchmarks by Market

Market	Typical Gross Yield	What It Means
High-cost city (San Francisco, Manhattan)	2–4%	Investors buying for appreciation
Mid-tier US city	5–8%	Balanced income + growth market
Secondary/tertiary markets	8–12%	Income-focused, less appreciation
Emerging international markets	6–15%	Higher yield, higher risk/complexity
UK (London)	3–5%	Similar to US gateway cities
Australian cities	3–5%	Sydney/Melbourne especially compressed

Gross Yield as a Quick Filter

Many experienced investors use gross yield as a first filter — if it doesn't pass the screen, they don't spend more time on it:

• Below 5% gross: needs a strong appreciation case to make sense
• 5–7%: worthy of deeper analysis
• Above 7%: investigate why — might be a great deal or a distressed area

Don't buy on gross yield alone. A 10% gross yield with 60% expenses is a 4% net yield and probably a management nightmare.

The 1% Rule (and Why It's Outdated)

You've probably heard the "1% rule" — monthly rent should be at least 1% of purchase price. On a $200,000 property, that's $2,000/month rent. This equates to roughly 12% gross yield.

In most markets today, the 1% rule is essentially impossible to hit on conventional purchases. It made sense in 2010–2015 when prices were depressed post-crash. Using it as a hard filter today would eliminate nearly every property in most markets. It's better used as a general direction indicator (higher is better) than a binary pass/fail.

What's the difference between rental yield and cap rate?

Rental yield uses purchase price (or current market value) in the denominator. Cap rate uses the same but calculates NOI differently — specifically excluding mortgage interest from expenses. They're similar but not identical. Cap rate is the standard used by commercial real estate professionals.

Should I use purchase price or current market value?

For buying decisions, use purchase price — that's what you're actually investing. For ongoing portfolio review, current market value shows how your yield has compressed as your property appreciates. A property you bought at 7% yield might be at 4% yield today based on current value, which affects whether it's still a good hold.

How do rental yields compare to stock market returns?

Stock market averages 7–10% total return historically (dividends + appreciation). A 5% net rental yield plus 3–4% appreciation is in the same ballpark, but with more hands-on management and illiquidity. Leverage can amplify the real estate return significantly.

Related Tools

• Cap Rate Calculator — professional-grade income metric
• Cash-on-Cash Calculator — return after financing
• Property Value Calculator — establish your denominator