Kalkulo

Rental yield calculator

Calculate the gross and net yield of a rental property from purchase price, rent and operating expenses, to compare against other properties or asset classes.

Result
Gross yield
5.60%
Net yield
4.80%

About this tool

Why use this tool

Rental yield measures the return on a rental property investment. It's the key metric to compare properties across markets — a house in Cleveland at a 10 % cap rate is a very different animal from a duplex in San Francisco at 3 %. Rental yield helps decide between real estate and alternatives (S&P 500 long-term average return around 10 % nominal since 1928, per Fidelity/Dimensional; top high-yield savings accounts around 4.5 % APY in 2026 per Bankrate; REITs 5–7 %).

How it works

Gross yield = (annual rent / total purchase price) × 100. Net yield subtracts operating expenses: property taxes (national average 1.1 % of home value per Tax Foundation, but 2 %+ in New Jersey/Illinois), homeowners insurance ($1,500–$3,000/yr per III), HOA fees, property management (8–10 % of rent), vacancy (5–8 %), maintenance (1 % of home value/yr) and CapEx reserves. This produces the Net Operating Income (NOI) used in a proper cap rate calculation.

Real example

A single-family home in Indianapolis bought for $180,000 including closing costs, renting for $1,500/month. Annual rent = $18,000. Gross yield = 18,000 / 180,000 × 100 = 10 %. After $6,500 in annual expenses (taxes $2,000, insurance $1,200, management $1,800, maintenance $1,500), net yield = 11,500 / 180,000 = 6.4 % — a strong cap rate for the Midwest.

Practical tips

Follow the 1 % rule as a fast screen — monthly rent should be at least 1 % of purchase price. Use the BiggerPockets or Zillow rent estimators, then verify with local property managers. Consider Opportunity Zones or Section 8 for tax advantages. Set up an LLC for liability protection. Use Section 121 (primary residence exclusion) or 1031 exchange to defer capital gains. Screen tenants strictly via credit checks (Experian RentBureau) and background checks — one bad tenant destroys yield.

Disclaimer

This estimate is a starting point. Actual returns depend on your tax bracket, financing (leverage amplifies gains and losses), appreciation and unforeseen events (major repairs, vacancy, litigation). Consult a CPA and a licensed real estate attorney before buying. Past performance does not predict future returns. Real estate is illiquid — plan a 5+ year horizon.

Frequently asked questions

What's the difference between gross yield and cap rate?⌄
Gross yield simply divides annual rent by the purchase price. Cap rate is more precise: it divides Net Operating Income (rent minus operating expenses like taxes, insurance and management, but excluding mortgage payments) by the property's value. Two properties with identical gross yield can have very different cap rates once their actual running costs are accounted for.
How does financing change my actual return?⌄
Cap rate ignores your mortgage entirely, but cash-on-cash return — annual pre-tax cash flow divided by the actual cash you invested (down payment plus closing costs) — captures the effect of leverage. A leveraged property can show a much higher cash-on-cash return than its cap rate suggests, but the reverse is also true if the mortgage payment exceeds the rental income after expenses.
Does rental yield already account for property appreciation?⌄
No, yield and appreciation are separate. Total return combines both: a coastal property showing a modest 3-4% yield may still deliver a strong total return if prices rise steadily, while a Midwest property with an 8-10% yield may see flatter appreciation. Neither figure alone tells the full story.
Is the 1% rule still realistic in 2026?⌄
The 1% rule — monthly rent should be at least 1% of the purchase price — is a fast initial screen, not a guarantee of profitability. It's still achievable in many secondary and tertiary markets in the Midwest and South, but is rarely met in expensive coastal metros like San Francisco, Los Angeles, Boston or New York, where investors instead weigh appreciation potential more heavily.
How much does vacancy really eat into my yield?⌄
Even a well-managed rental typically experiences 5-8% vacancy or turnover loss annually — time between tenants, unit prep, and occasional non-payment. A property advertised at a 10% gross yield can easily drop to a 7-8% net yield once realistic vacancy, along with property management and maintenance, is factored in.

Other popular tools