Rental Yield Calculator

What the rental yield calculator measures

Rental yield compares one year of property income with property value. The gross result uses scheduled rent and other recurring income before losses and expenses. The net result uses NOI after the entered vacancy and operating expenses but before debt service.

The calculator then displays annual cash flow and cash-on-cash return as separate financing-sensitive metrics. This prevents the mortgage structure from changing the property’s net yield while still showing its effect on the investor’s pre-tax cash result.

Gross and net rental yield formulas

Gross rental yield equals annual rent plus other recurring income divided by property value. Because it is a top-line ratio, it does not deduct vacancy, collection loss, management, repairs, insurance, taxes, or owner-paid utilities. Use consistent income definitions when comparing properties.

Net rental yield equals NOI divided by property value. EstateCalc calculates NOI by applying the vacancy rate to all potential income, then subtracting the one annual operating-expense amount entered. Intermediate figures retain full precision and only displayed results are rounded.

Vacancy, other income, and operating expenses

The vacancy input combines physical vacancy and collection loss into one annual percentage. It applies to both scheduled rent and other income rather than building a monthly rent roll. For seasonal or multi-unit properties, create separate scenarios if one blended percentage hides meaningful timing differences.

Other income should be recurring and property-related. Operating expenses should cover recurring costs paid by the owner before debt service and investor income tax. Capital improvements and sale costs are not automatically included; use an explicit reserve only when that treatment is consistent across scenarios.

Rental yield versus cap rate and cash-on-cash return

With the same NOI and value definitions, net rental yield on this page is mathematically the same NOI-to-value ratio used for cap rate. The cap-rate page focuses on that property-level metric, while this page places gross yield, net yield, cash flow, and investor cash return in one rental-income view.

Cash-on-cash return subtracts annual debt service from NOI and divides the remaining cash flow by cash invested. It can therefore change when financing or the amount of investor cash changes, even when gross and net rental yield remain unchanged.

How to interpret the result within its limits

Use property and lease data you can trace, then change one assumption at a time. A higher vacancy or expense input will reduce NOI and net yield; a different loan payment changes cash flow but not the property-level yields. The calculator does not insert a market benchmark or label any percentage.

This is a one-year, nominal, pre-tax model. It does not include rent growth, appreciation, principal paydown as a return component, depreciation tax effects, refinance, or sale. Use the full rental property or IRR model when the decision depends on those multi-year cash flows.

Rental Yield Calculator FAQ