Rental Yield Calculator
Compare gross and net rental yield on the same property, and on total cost rather than just price — the three figures that get quoted interchangeably and should not be.
Rental Yield Calculator
Results recalculate instantly on every keystroke. Nothing you type is transmitted.
What this result does not account for
- A single-year income measure that ignores capital growth entirely.
- Unlevered, so it does not describe the return on your own cash.
- Sensitive to whether current or market rent is used, and to whether reserves are deducted from NOI.
In short: Gross yield is annual rent divided by price; net yield is NOI divided by price and is identical to the cap rate. On the same property gross can read 13.71% while net reads 8.02% — the gap is simply the operating expenses.
Formula
gross yield = annual rent ÷ price
net yield = NOI ÷ price = cap rate · net yield on cost = NOI ÷ (price + costs)
[('annual rent', 'gross rent before any deduction'), ('NOI', 'rent after vacancy and operating expenses'), ('price', 'purchase price alone'), ('total cost', 'price plus acquisition costs actually paid')]
Worked Example
- Divide gross annual rent by the price for the gross yield.
- Divide NOI by the same price for the net yield — which is the cap rate.
- Note the gap; it is your operating expenses and vacancy, stated as a yield.
- Add acquisition costs to the denominator for the yield on what you actually spent.
- When comparing properties, confirm every figure uses the same numerator and the same denominator.
144,000 of rent on a 1,050,000 price is a gross yield of 13.7143%. The NOI of 84,240 on the same price is a net yield of 8.0229% — a gap of 5.6914 percentage points, which is nothing more than the operating expenses restated. Add 31,500 of acquisition costs and the net yield on total cost falls again to 7.7892%. All three describe the same building.
Strengths & Limits Of This Model
Where this engine is strong
- Shows gross, net and yield-on-cost side by side
- States plainly that net yield on price is the cap rate
- Quantifies the gap as operating expenses restated
Where it stops
- Ignores capital growth and tax
- Unlevered
Practical Use Cases
Comparing two listings
Putting a gross-quoted property beside a net-quoted one on the same basis.
Assessing your own return
Measuring income against total cost rather than headline price.
Translating between markets
Converting a yield quoted in one convention into the cap rate another market uses.
Challenging an advertised figure
Showing what a quoted gross yield becomes once costs are deducted.
Setting a purchase target
Working back from a required net yield to the price you can pay.
Methodology & Editorial Standards
Gross yield divides rent by price; net yield divides NOI by the same price, which makes it arithmetically identical to the capitalisation rate — the page states this rather than presenting them as separate measures. Yield on total cost adds acquisition costs to the denominator. The gross rent multiplier shown is the exact reciprocal of the gross yield, computed from the same two figures.
Computation runs in IEEE-754 double precision at full internal precision; rounding to two decimal places occurs strictly at the display layer, so no cumulative drift enters the result. All monetary outputs use accounting presentation — grouped thousands, two decimals, negatives in parentheses — so figures can be transcribed directly into a model or working paper. Division-by-zero and out-of-domain inputs return an em-dash rather than a misleading number.
This engine was reconciled against an independent reference implementation and hand-verified for the worked example above before release. Our full five-stage review process is published on the About Us page.
Disclaimer. This calculator is provided for informational and modelling purposes only and does not constitute financial, tax, legal, medical, or engineering advice. Verify all figures with a qualified professional before acting on them.
Rental Yield Calculator — 10 Expert FAQs
10 analyst-written answers to the questions practitioners actually ask — optimised for voice and answer-engine retrieval.
What is the difference between gross and net yield?
Gross yield divides rent by price and ignores every cost of ownership. Net yield divides NOI by price, so vacancy and operating expenses are already deducted. The gap between them is large — commonly five points or more — and is the single most common source of confusion in advertised returns.
Is net rental yield the same as the cap rate?
Yes, when both use price as the denominator and NOI as the numerator. They are the same ratio under two names. The words differ by tradition: yield is the landlord's term and capitalisation rate is the appraiser's.
Should acquisition costs be included?
For assessing your own investment, yes — stamp duty, legal fees and survey costs are cash you spent to acquire the income. Market convention quotes the cap rate on price alone, so use price when speaking to the market and total cost when speaking to yourself.
What is a good rental yield?
It varies enormously by market and is inversely related to growth expectations. Prime city assets often yield four to five per cent net because buyers expect capital growth; secondary markets can yield eight to ten because they do not. A high yield is compensation for something, and the discipline is working out for what.
Why is the advertised yield always higher than mine?
Because it is usually gross, usually on price rather than total cost, and usually assumes full occupancy with no management fee. Each of those choices is defensible on its own and the combination is not comparable to a properly underwritten net figure.
How does yield relate to the gross rent multiplier?
Gross yield and GRM are exact reciprocals: a 13.7143% gross yield is a multiplier of 7.2917. One is a percentage and the other a multiple, but they carry identical information, so quoting both is redundant.
Does yield account for the mortgage?
No. Yield is unlevered, like the cap rate, which is what makes it comparable between buyers. For the levered figure — what your own cash earns after the lender is paid — use the cash-on-cash return.
Should I use current or market rent?
Current rent for what you are buying today; market rent for what it could become. Quoting a yield on market rent when the units are let below market describes a property you do not yet own, and the gap should be discounted for the time and cost of closing it.
Can yield be negative?
Net yield can, when operating expenses exceed rental income — heavily vacant buildings, or assets hit by a sharp rise in taxes or insurance. Gross yield cannot be negative while any rent is collected, which is another reason it can mislead.
Why do yields fall when prices rise?
Because price is the denominator. If rents are slow to follow a price rise, the yield compresses mechanically. Falling yields across a market therefore signal that capital values have run ahead of income — which is either optimism about future rents or a warning, depending on which proves right.