What is a good rental yield?

There is no universal answer — it depends on the country, city, and property type. In most developed markets, a gross yield above 5–6% is considered reasonable, and a net yield above 4–5% is often seen as the minimum threshold for a worthwhile investment. High-demand urban areas may yield less (3–4% gross) but offer stronger capital appreciation; regional or suburban markets can yield 7–10% gross with lower growth potential.

What is the difference between gross and net rental yield?

Gross rental yield is annual rent divided by property value — it ignores all costs. Net rental yield subtracts annual operating expenses (insurance, maintenance, management fees, letting agent fees) before dividing by property value. Net yield is the more meaningful figure because it reflects what you actually earn after maintaining the property. Always ask for both when evaluating an investment.

How do I calculate rental yield?

Divide annual rent by property value and multiply by 100 to get gross yield as a percentage. For net yield, subtract your annual operating expenses from annual rent first, then divide by property value. Example: $26,400 annual rent on a $350,000 property = 7.54% gross yield. After $4,000 in expenses: ($26,400 − $4,000) / $350,000 × 100 = 6.40% net yield.

How does rental yield differ by country?

Yields vary significantly. Higher-risk or emerging markets (e.g. parts of Eastern Europe, Southeast Asia) can offer gross yields of 8–12%, while premium cities like London, Sydney, or New York often yield only 2–4% gross. Local taxes, landlord regulations, vacancy rates, and currency risk all affect the real-world return. Always research local market conditions and tax treatment before investing internationally.

Is rental property a good investment?

Rental property can provide steady cash flow, inflation hedging, and long-term capital appreciation — but it is not passive income. Landlords face vacancies, maintenance costs, regulatory risk, and illiquidity. The best approach is to evaluate each property on its own merits: net yield, location trends, financing costs, and your personal tax situation. A property with a strong net yield and in a growing area is far more compelling than one that barely covers costs.

Should I include mortgage payments in expenses?

No — yield calculations measure the return on the property asset itself, independent of how you finance it. Mortgage repayments are a financing decision, not an operating expense. To evaluate cash flow after debt service, subtract your monthly mortgage payment from monthly rent and express that as a percentage of your equity or down payment (sometimes called "cash-on-cash return").

Rental Yield Calculator

The Rental Yield Calculator measures how much annual income a rental property generates relative to its purchase price — both before and after operating expenses. Gross yield gives a quick snapshot for comparing properties; net yield shows what you actually keep after costs like insurance, maintenance, and property management. Use this alongside the Cap Rate Calculator for a complete picture of investment performance.

Property Value

Monthly Rent

Annual Operating Expenses

Insurance, maintenance, management fees — not mortgage

Gross Rental Yield

7.54%

Net Rental Yield

6.40%

Annual Gross Income

$26,400.00

Annual Net Income

$22,400.00

How to use this calculator

1
Enter the property value
Type the current market value or purchase price of the property. This is the denominator in both yield formulas.
2
Enter the monthly rent
Enter the monthly rental income you expect to receive (or are currently receiving). The calculator multiplies this by 12 for annual gross income.
3
Enter annual operating expenses
Include recurring costs such as insurance, property management fees, repairs and maintenance, landlord warranties, and letting agent fees. Do not include mortgage repayments — this is a yield calculation, not a cash-flow calculation.
4
Read your results
Gross yield, net yield, annual gross income, and annual net income are all displayed instantly. A higher net yield indicates a more profitable investment relative to price.

Formula

Gross Rental Yield = (Annual Rent ÷ Property Value) × 100

Annual Rent = Monthly Rent × 12

Net Rental Yield = ((Annual Rent − Annual Expenses) ÷ Property Value) × 100

Annual Net Income = Annual Rent − Annual Expenses

Gross yield ignores running costs and is useful for quick property comparisons. Net yield subtracts annual operating expenses (insurance, maintenance, management fees, etc.) from annual rent before dividing by property value — giving a more realistic return figure. Neither yield accounts for financing costs (mortgage interest), capital gains, or vacancy periods. Example: a property worth $350,000 renting for $2,200/month with $4,000/year expenses gives a gross yield of 7.54% and net yield of 6.40%.

Worked Example

Property Value: $350,000 Monthly Rent: $2,200 Annual Rent: $2,200 × 12 = $26,400 Annual Expenses: $4,000 Gross Yield = ($26,400 ÷ $350,000) × 100 = 7.54% Net Yield = (($26,400 − $4,000) ÷ $350,000) × 100 = ($22,400 ÷ $350,000) × 100 = 6.40% Annual Net Income = $22,400 A gross yield of 7.54% looks attractive; after expenses the real return drops to 6.40% — still above the 5% threshold many investors use as a minimum acceptable net yield.

Frequently Asked Questions

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