Rental Yield Calculator (Gross + Net)

What is rental yield?

Rental yield is the annual rental income produced by an investment property, expressed as a percentage of the property's purchase price. It comes in two flavours:

• Gross yield = annual gross rent ÷ price × 100. The headline number you see in property listings and brokerage marketing materials.
• Net yield = NOI (rent after vacancy and operating expenses) ÷ price × 100. The honest number — what actually lands in your pocket each year before financing and tax.

Net yield is mathematically identical to cap rate; the only difference is convention. UK and European buy-to-let markets prefer "yield" as a percentage of price; US commercial markets prefer "cap rate" as a ratio. Same calculation, same meaning.

The formulas

Gross yield = (Monthly rent × 12) ÷ Price × 100
Effective gross income (EGI) = Annual rent − Vacancy & credit loss
NOI = EGI − Operating expenses
Net yield = NOI ÷ Price × 100

Typical city benchmarks (rough, 2026)

Why such variation? Appreciation markets (London, Paris, Berlin) trade at low yields because investors are paying for expected capital growth; cash-flow markets (UK regional, US Midwest) trade at high yields because investors expect little appreciation and need current cash to compensate.

Two estimate methods for expenses

If you have a real expense estimate (property tax, insurance, management, repairs, reserves) totalled up, use the absolute input. If you're screening many deals and don't yet have an itemised expense estimate, use the % of EGI slider:

• 20–30% — new build, low-cost-of-ownership location (low property tax, no HOA), self-managed.
• 30–40% — typical stabilised residential rental, professionally managed.
• 40–50% — older building, higher-property-tax area, HOA/condo fees.
• 50%+ — Class C, deferred maintenance, owner-paid utilities, high-tax jurisdiction.

A common rule of thumb in US buy-to-let is the 50% rule: operating expenses tend to equal about half of gross rent in residential rentals. It's a quick screen, not a precise number — use it for first-pass triage, then build a real expense estimate for any property you're seriously considering.

Common mistakes

• Comparing gross yields across regimes without accounting for tax / regulation. A UK buy-to-let with mortgage-interest-deduction limitations has very different net economics than a Texas single-family rental with full Section 168 depreciation. Net yield doesn't capture that; you need a full cash-on-cash + tax model.
• Ignoring leasehold ground rent. UK leasehold properties have ongoing ground rent and service charges that can eat 1–2% of yield. Build these into your expense estimate.
• Anchoring on gross yield. A "7% yield" headline that becomes 3.5% net after honest expenses is a different deal. Verify net before getting excited.
• Treating net yield as a forecast. It's a snapshot of today's rent vs price. Rents may grow (which raises the effective yield-on-cost over time); maintenance bills may spike (which lowers it). Stress-test both.
• Mixing nominal and real. If you're modelling against a 6% required yield "real" but using nominal rent and price inputs, you're inadvertently demanding a much higher hurdle. Pick one regime.

Gross vs net vs cap rate vs ROI

Pairs with

• cap-rate — the same calculation, US convention.
• noi-calculator — full operating expense breakdown.
• gross-rent-multiplier — the reciprocal of gross yield (1/yield × 100).
• property-irr — multi-year return including appreciation.