Rental yield calculator
Calculate gross and net rental yield with a worked vacancy example, explicit annual deductions and a consistent property-value basis.
By MarkMyProperty · Updated
Rental Yield Calculator
Use the whole property value, not just your down payment. Keep the same value basis when comparing properties.
Use one year of rent before lost rent or costs. Monthly rent × 12 applies only when that rate covers the full year.
Add annual operating costs and rent lost to vacancy or nonpayment once. Leave blank for gross yield only; enter 0 only for an intentional zero-deduction scenario.
Enter valid amounts and a time period to see your estimate. Amounts must be non-negative; rates and periods must stay within the limits shown by each field.
Net yield subtracts only the deductions you enter. Count vacancy losses once; do not deduct lost rent again if it has already been removed from income. This is not a complete cash-flow, tax or investment-return calculation.
Estimates use your inputs in one currency; selecting another currency changes the unit, without converting amounts. Buyability uses your chosen share of income and is not lender approval. Rent vs Buy compares home equity minus down payment, loan payments and maintenance against investing the down payment minus rent. It excludes taxes, transaction costs and investing monthly cash-flow differences.
How the calculation works
Use one currency and a one-year period. Start with rent before vacancy or cost deductions; monthly rent × 12 works only if that rate applies for the full year. Combine annual operating costs and lost rent in the deductions field, counting each once. A blank deductions field gives gross yield only. Entering 0 deliberately gives a zero-deduction scenario; it does not establish that real costs are zero.
Formula
Gross yield = annual rent before vacancy deductions / property value × 100. Net yield (entered deductions) = (annual rent before vacancy deductions − annual expenses and lost rent) / property value × 100.
Worked example
In the fictional example below, property value is 200,000 and rent before vacancy deductions is 12,000. Operating costs of 2,000 plus one month of lost rent at 1,000 give deductions of 3,000. Gross yield is 6%; income after entered deductions is 9,000 and net yield is 4.5%. These are generic currency units and arithmetic assumptions, not a real listing or market benchmark.
What the estimate leaves out
This model subtracts only entered deductions. It does not estimate vacancy, repairs, financing, tax, sale costs or value changes automatically. A net label does not make the result after-tax profit, cash-on-cash return or a complete cash-flow forecast. Loan principal payments and refundable deposits are different from operating costs. Record omitted or unknown amounts separately; they are not zero. Capital appreciation is outside rental yield.
Work through annual rent, vacancy and costs
All amounts below are fictional generic currency units. Assume a constant monthly rent of 1,000, one vacant month and 2,000 of selected annual operating costs. The vacancy and cost amounts are invented solely to demonstrate the calculation; they are not expected costs or a forecast for any location.
Enter 200,000 as Property value, 12,000 as Annual rent before vacancy deductions and 3,000 as Annual expenses and lost rent. The 3,000 is 2,000 of operating costs plus 1,000 of rent not received. The calculator does not estimate that breakdown for you.
| Component | Example amount or result | Period or calculation |
|---|---|---|
| Property value | 200,000 | Whole-property value used as the denominator |
| Monthly scheduled rent | 1,000 | Assumed constant for twelve months |
| Annual rent before vacancy deductions | 12,000 | 1,000 × 12 |
| Annual operating costs | 2,000 | Selected costs for this example only |
| Lost rent | 1,000 | One vacant month at the assumed rent |
| Annual expenses and lost rent | 3,000 | 2,000 + 1,000; enter this combined deduction |
| Annual income after entered deductions | 9,000 | 12,000 − 3,000 |
| Gross rental yield | 6% | 12,000 / 200,000 × 100 |
| Net rental yield (entered deductions) | 4.5% | 9,000 / 200,000 × 100 |
Count vacancy or unpaid rent once
If receipts already show only 11,000 collected after the vacant month, subtracting the same 1,000 again understates income. For the worksheet above, reconstruct the 12,000 pre-vacancy amount from the documented rent schedule, then enter the 1,000 loss together with operating costs. Do not add another vacancy deduction elsewhere.
If you only know collected rent and cannot establish the pre-vacancy amount, this example does not establish a comparable scheduled-rent gross yield for that property. Record the income basis and unknowns before making comparisons. A vacant month is lost income, not a second cash bill. A refundable deposit is not assumed to be rental income.
Make missing deductions and losses visible
Leave Annual expenses and lost rent blank when you want gross yield without a cost estimate. Net yield remains unavailable until you enter deductions. An explicit 0 is accepted so you can explore a scenario, but it should not stand in for unknown bills.
For the same fictional 200,000 value and 12,000 rent, changing only deductions produces the scenarios below. The high-deduction case is arbitrary sensitivity arithmetic. Negative net yield is retained when deductions exceed rent; none of these percentages is a target or an investment recommendation.
| Scenario | Annual deductions | Income after deductions and net yield |
|---|---|---|
| Intentional zero-deduction scenario | 0 | 12,000; 6% |
| Worksheet operating costs and lost rent | 3,000 | 9,000; 4.5% |
| Deductions exceed rent | 13,000 | −1,000; −0.5% |
Keep the value basis and cost scope consistent
The denominator is the whole value you enter, not your cash down payment or remaining loan. Record whether it is a dated purchase price, asking amount, valuation or acquisition cost including fees. Those are different bases. Comparing two properties using different bases can give a misleading ranking even when both calculations are arithmetically correct.
For example, the same fictional 9,000 income gives 4.5% against a value of 200,000, but about 4.09% against a total acquisition cost of 220,000. Including fees changes the denominator; it is not evidence that rent or the property changed. An asking price is not an independently confirmed valuation.
For an operating-yield comparison, collect applicable annual running costs such as insurance, management, maintenance and owner-paid charges. Financing payments, tax treatment, major works and entry or exit costs require separate scope decisions. Including loan principal payments in the deductions changes the calculation into a cash-outflow scenario; label it accordingly rather than treating it as comparable operating yield. The ASIC Moneysmart source discusses Australian cost and vacancy considerations; its tax and borrowing rules are not global rules.
- Record the date, evidence and basis of the property value.
- Use annual rent before lost-rent and cost deductions, in the same currency as value.
- List each included operating cost and lost-rent amount once.
- Keep unknown costs and excluded financing or tax items visible.
- Compare consistent bases and expense scopes rather than choosing the highest percentage.
- Use actual listing evidence and applicable local information before relying on the scenario.
Frequently asked questions
How do I calculate gross and net rental yield?
Gross yield is annual rent before vacancy deductions divided by the entered whole-property value, multiplied by 100. This calculator’s net yield subtracts entered annual expenses and lost rent from that annual rent before dividing by the same value. It subtracts no additional costs automatically.
Why is net rental yield missing when I leave expenses blank?
Blank deductions mean a cost estimate has not been supplied, so the calculator shows gross yield only. Enter deductions to see net yield, or enter 0 deliberately for a zero-deduction scenario. Unknown costs are not zero.
How do I include a vacant month without counting it twice?
Use annual rent before vacancy deductions and add the lost rent once to annual expenses and lost rent. In the fictional worksheet, 12,000 annual rent less 1,000 lost rent and 2,000 operating costs leaves 9,000. Do not deduct the same loss again from income already reduced for vacancy.
Should I enter the property value or my down payment?
Enter the whole-property value or clearly recorded acquisition-value basis, not just your down payment. Yield against property value is different from a cash-on-cash return. Compare properties using the same value and cost basis.
Can net rental yield be negative?
Yes. Entered deductions above annual rent produce negative income and net yield. The fictional 200,000 property value, 12,000 annual rent and 13,000 deductions produce −1,000 income and −0.5% net yield.
Does a high rental yield mean a property is a good investment?
No universal percentage answers that question. Yield depends on the income, cost and value basis and excludes several risks and returns. Check actual property evidence, unknown costs, financing and applicable local requirements; this tool does not recommend an investment.