Rental Yield Calculator
Calculate gross and net rental yield from purchase price, annual rent, and expenses.
Returns cash-on-cash return and cap rate for investment comparisons.
Rental yield measures the annual return on a rental property investment as a percentage of its purchase price (gross yield) or after deducting operating expenses (net yield). It is the primary metric used by property investors to compare investment opportunities.
Gross Rental Yield formula: Gross Yield = (Annual Rental Income / Property Value) × 100%
Net Rental Yield formula: Net Yield = ((Annual Rental Income − Annual Operating Expenses) / Property Value) × 100%
Annual Operating Expenses typically include:
- Property taxes
- Insurance
- Property management fees (8–12% of rent)
- Maintenance and repairs (budget 1–2% of property value per year)
- Vacancy allowance (5–10% of annual rent)
- HOA fees (if applicable)
Return on equity (for leveraged investments): Cash-on-Cash Return = Annual Pre-Tax Cash Flow / Total Cash Invested × 100%
Where Total Cash Invested = down payment + closing costs + initial renovation costs.
Global rental yield benchmarks (2024–2025):
| City | Average Gross Yield |
|---|---|
| Detroit, MI (USA) | 8–12% |
| Memphis, TN (USA) | 7–10% |
| London, UK | 3–5% |
| Dubai, UAE | 6–8% |
| Tokyo, Japan | 4–6% |
| Sydney, Australia | 2–4% |
| Warsaw, Poland | 5–7% |
Worked example: Property purchased for $320,000. Monthly rent: $2,000. Annual operating expenses: $8,500.
Gross yield = ($2,000 × 12 / $320,000) × 100 = 7.5% Net yield = (($24,000 − $8,500) / $320,000) × 100 = 4.84%
Down payment was $80,000 (25%). Annual cash flow after mortgage = $3,600. Cash-on-cash return = $3,600 / $80,000 × 100 = 4.5%
A net yield above 5% is generally considered strong for residential real estate in most developed markets.