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Real Estate

Net rental yield

Subtracts running costs, but not mortgage interest, so the property's own performance is isolated.

The Formula

net yield = (annual rent - costs) / property value

Subtracts running costs, but not mortgage interest, so the property's own performance is isolated.

SymbolMeaning
Y nNet yield
RAnnual rent
CAnnual costs
VProperty value

What Each Symbol Means

Y nratio

Net yield

Return after running costs.

Rcurrency

Annual rent

Total rent received in a year.

Ccurrency

Annual costs

Management, insurance, maintenance, voids.

Vcurrency

Property value

Purchase price or current market value.

See It Worked With Real Numbers

A formula on its own does not tell you which number goes where. The how to calculate rental yield page applies this equation to a concrete case, shows every intermediate step, and names the mistakes that produce a wrong answer even when the algebra is right.

Where This Formula Appears

This equation is the working core of How To Calculate Rental Yield, filed under Finance. Every number the guide produces comes from substituting into this one line.