Rental Yield Calculator
Rental yield is the return a property produces before financing, and the gap between the gross and net figures is where most landlords discover their real return.
Gross yield
6.00%
- Net yield
- 4.50%
- Net annual income
- $18,000.00
- Price to rent ratio
- 16.6667
Values update as you type. This calculator covers the single scenario its formula assumes — see Common Mistakes for what it leaves out.
The formula this calculator uses
gross yield = annual rent / property value
- gross
- Gross yield, before any costs
- net
- Net yield, after running costs
- rent
- Annual rent received
- value
- Property value or purchase price
- costs
- Annual running costs, excluding mortgage interest
How to check the result by hand
- 1
Establish the annual rent
Use the rent you could realistically achieve, not the asking price. For a property already let, take the actual annual figure including any service charges paid by the tenant.
- 2
Decide which value to use
Purchase price answers whether the deal was good. Current market value answers whether it is still worth holding. State which one you are using.
- 3
Divide rent by value for the gross yield
Twenty four thousand divided by four hundred thousand is 0.06, or six percent. This is the headline figure.
- 4
Subtract the running costs for the net yield
Management, insurance, maintenance, service charges and a realistic void allowance. Six thousand of costs leaves eighteen thousand, and eighteen thousand over four hundred thousand is 4.5 percent.
- 5
Compare with financing costs
If the net yield is below the mortgage rate, the rent does not cover the borrowing and the investment depends on capital growth. That is the decisive comparison for a leveraged purchase.
For worked examples, common mistakes and the limits of this formula, read the full How To Calculate Rental Yield page.