Gross yield versus net yield
Gross rental yield is annual rent divided by property value, expressed as a percentage — a fast headline number that ignores costs. Net yield subtracts your running expenses first, so it reflects what actually lands in your pocket relative to the price. A flat worth $350,000 renting at $2,400 a month has a gross yield of about 8.2%, but once $8,000 of annual costs come out the net yield drops to around 6%. That gap between gross and net is where a lot of would-be profit quietly disappears, which is why serious buyers lead with the net figure.
Which expenses to include
For a realistic net yield, count everything it costs to own and let the property over a year: property taxes, building and landlord insurance, management fees, repairs and maintenance, service charges or HOA dues, and a vacancy allowance for the weeks it sits empty between tenants. Do not include your mortgage — yield measures the property's income against its value, not your financing. Under-counting expenses is the most common way a listing's advertised yield turns out to be fantasy, so err toward including a maintenance and vacancy buffer even if the current owner claims costs are lower.
Using yield to compare properties
Yield shines as a comparison tool. Two properties in different areas at different prices can be lined up by their net yield to see which works the rent harder relative to cost. Generally, cheaper properties and higher-rent markets show stronger yields, while expensive, prestige locations trade lower yield for expected capital growth. There is no single right answer: a high-yield property may sit in a weaker area with more tenant risk, while a low-yield one may appreciate faster. Yield tells you about income; it does not capture the whole return.
Yield, cap rate and total return
Net rental yield is close cousin to the cap rate — both divide income by value — and in practice net yield and cap rate often land in the same ballpark. Neither captures capital appreciation, which for many investors is a big part of the total return, nor the effect of a mortgage. Use yield to judge the income side, cap rate to compare deals, and cash-on-cash to see your leveraged return, then weigh expected price growth on top. These tools use standard, published real-estate formulas and the figures you enter. They are estimates for planning and comparison, not financial, investment or tax advice — run your own numbers and speak to a qualified professional before you buy.
Frequently asked questions
How do you calculate rental yield?
Gross yield = annual rent ÷ property value × 100. Net yield = (annual rent − annual expenses) ÷ property value × 100. This calculator returns both from your value, monthly rent and expenses.
What is a good rental yield?
It varies by market, but many investors look for a net yield around 5–8%. High-growth cities often yield less; cheaper or higher-rent areas yield more but may carry more risk.
Should the mortgage be included in yield?
No. Rental yield measures the property's income against its value, so it excludes financing. To factor in a mortgage, use the cash-on-cash return calculator.
Is net yield the same as cap rate?
They're very close — both divide net income by value. Cap rate is the term used when comparing investment deals; net yield is common in residential lettings. The maths is nearly identical.