Calculate gross and net rental yield to quickly benchmark and compare the income performance of any rental property.
Rental yield expresses your annual rental income as a percentage of the property's value. Gross yield uses total rent before expenses — useful for quick comparisons. Net yield subtracts expenses for a more realistic picture. Together they give you an instant sense of whether a property is generating competitive returns for its price point.
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Gross yield = (Annual Rent ÷ Property Value) × 100. Quick and simple — useful for comparing properties at a glance before diving into expenses.
Net yield = (Annual Rent - Vacancy Loss - Expenses) ÷ Property Value × 100. More realistic — accounts for the real costs of running the property.
Property worth $300,000, renting for $2,000/month ($24,000/year). Gross yield = $24,000 ÷ $300,000 = 8.0%. After 5% vacancy ($1,200) and $5,000 expenses: Net yield = $17,800 ÷ $300,000 = 5.93%.
In major US cities, gross yields of 4–6% are common. Secondary markets often yield 6–10%. Rural markets or higher-risk properties may show 10%+. A gross yield below 5% in most markets makes it difficult to cover expenses and debt service. Net yields of 4–6% are generally considered solid for well-located properties.
They're closely related but cap rate uses Net Operating Income (rent minus vacancy and expenses) divided by property value — which is essentially net yield. Gross yield uses total rent before any deductions. Cap rate is the more rigorous investment metric; gross yield is the faster comparison tool.
No — rental yield and cap rate both exclude financing costs intentionally. This makes them useful for comparing properties regardless of how they're purchased. To factor in your specific financing, use the cash-on-cash return calculator.