Quick Answer

A $300,000 property renting for $2,000/month with $6,000 in annual expenses has an estimated gross yield of approximately 8.00% and an estimated net yield of approximately 6.00%.

Property Value ($)

Monthly Rent ($)

Annual Operating Expenses ($)

Taxes, insurance, maintenance, management, vacancies

Common Examples

Input	Result
$300,000 value, $2,000/month rent, $6,000 expenses	Estimated gross yield: approximately 8.00%, net yield: approximately 6.00%
$250,000 value, $1,500/month rent, $4,000 expenses	Estimated gross yield: approximately 7.20%, net yield: approximately 5.60%
$500,000 value, $3,000/month rent, $10,000 expenses	Estimated gross yield: approximately 7.20%, net yield: approximately 5.20%
$200,000 value, $1,800/month rent, $3,600 expenses	Estimated gross yield: approximately 10.80%, net yield: approximately 8.64%
$400,000 value, $2,500/month rent, $8,000 expenses	Estimated gross yield: approximately 7.50%, net yield: approximately 5.50%

How It Works

This calculator uses the standard rental yield formulas:

Gross Rental Yield

Gross Yield = (Annual Rent / Property Value) x 100

Annual Rent = Monthly Rent x 12

Gross yield measures the total rental income as a percentage of property value, before any expenses. It is useful for quick comparisons between properties.

Net Rental Yield

Net Yield = ((Annual Rent - Annual Expenses) / Property Value) x 100

Net yield accounts for operating expenses, providing a more accurate picture of actual return. It does not include mortgage payments, as yield measures the property’s performance independent of financing.

Operating Expenses

Common operating expenses include:

• Property taxes
• Property insurance
• Maintenance and repairs (typically 1% to 2% of property value annually)
• Property management fees (typically 8% to 12% of rent)
• Vacancy allowance (typically 5% to 10% of annual rent)
• HOA fees (if applicable)

Yield vs. Cap Rate

Rental yield and capitalization rate (cap rate) are closely related. Net yield is essentially the same as cap rate when calculated using net operating income (NOI). The main difference is terminological: “yield” is more common in international real estate markets, while “cap rate” is the standard term in U.S. commercial real estate.

Worked Example

A property valued at $300,000 rents for $2,000/month. Annual rent = $2,000 x 12 = $24,000. Operating expenses total $6,000/year. Estimated gross yield = ($24,000 / $300,000) x 100 = approximately 8.00%. Estimated net yield = (($24,000 - $6,000) / $300,000) x 100 = ($18,000 / $300,000) x 100 = approximately 6.00%. Estimated monthly profit after expenses = $18,000 / 12 = approximately $1,500.

Related Calculators

Cap Rate Calculator

Estimate the capitalization rate for a rental property based on net operating income and property value.

Home Affordability Calculator

Estimate how much house you can afford based on income, debts, down payment, and current interest rates.

Frequently Asked Questions

What is a good rental yield?

Rental yields vary significantly by location and property type. In the United States, estimated gross yields of 6% to 10% are generally considered decent for residential properties. In expensive urban markets, yields may be 3% to 5%, while smaller markets may offer 8% to 12%. Higher yields often come with higher risk or management intensity.

What is the difference between gross and net yield?

Gross yield uses total rental income before expenses. Net yield subtracts operating expenses (taxes, insurance, maintenance, management, vacancies) to show the actual income return. Net yield is always lower than gross yield and provides a more realistic measure of investment performance.

Should I include mortgage payments in expenses?

No. Rental yield and cap rate are calculated before financing costs. This allows for comparing properties on an equal basis regardless of how each is financed. Mortgage payments affect cash flow and cash-on-cash return, which are separate metrics.

How do I estimate operating expenses?

A common rule of thumb is that operating expenses typically run 30% to 50% of gross rent for residential properties. For a more precise estimate, add up property taxes, insurance, estimated maintenance (1% to 2% of property value), management fees (8% to 12% of rent if using a manager), and a vacancy allowance (5% to 10% of annual rent).

Does rental yield account for property appreciation?

No. Rental yield measures only the income return from rent. Total return on a real estate investment includes both income yield and capital appreciation (or depreciation). A property with a low yield in an appreciating market may still provide strong total returns when factoring in value growth.