Rental Yield Calculator

Frequently Asked Questions

• What is a good rental yield?

  Gross yields of 5-8% are typical in most markets; net yields of 4-6% after expenses indicate a solid investment. High-yield markets (some midwest US, parts of UK Midlands) can offer 8-12%.

• What's the difference between gross and net yield?

  Gross yield = Annual Rent ÷ Property Value. Net yield deducts running costs (maintenance, insurance, agent fees, voids). Net yield is the more meaningful number.

• What is cap rate?

  Cap rate (capitalization rate) = Net Operating Income ÷ Property Value. It's essentially net yield expressed for commercial-style analysis and is the standard metric for comparing investment properties.

• What is cash-on-cash return?

  For mortgaged properties: annual cash flow ÷ total cash invested (down payment + closing costs + initial repairs). It measures the return on actual money you've put in.

• What expenses should I include?

  Property taxes, insurance, maintenance (rule of thumb: 1-2% of value annually), management fees (8-10% of rent if using a manager), vacancy allowance (5-10% of rent), HOA, utilities (if landlord-paid).

• What is a typical vacancy rate?

  Plan for 5-10% vacancy — roughly 1 month vacant per year is a sensible budget for typical residential rentals.

• Should I use gross rent or actual collected rent?

  Use realistic collected rent. Multiply gross rent by (1 ? vacancy %) and subtract collection losses. Many investors are too optimistic on this number.

• Does this calculator include capital appreciation?

  No — yield measures cash income only. Total return = yield + capital appreciation, but appreciation is speculative. Yield is the conservative measure.

• How does leverage affect returns?

  Mortgages amplify returns when property appreciates and rent covers payments — but also amplify losses. Cash-on-cash return rises with leverage; risk rises proportionally.

• What is the 1% rule?

  A property "passes" the 1% rule if monthly rent equals at least 1% of purchase price ($200K property ? $2,000/mo rent). It's a quick screening filter; few properties meet it in expensive markets.