Rental Yield Calculator

Calculate rental yield to judge whether a property’s rent matches its price

This rental yield calculator is for one job: helping you decide if a potential rental property is priced sensibly for the rent it can realistically earn. When people search “rental yield” they typically want a quick percentage that lets them compare two listings without building a full spreadsheet. That is what this page is designed to do. It gives you gross yield (the simple rent-to-price ratio) and a more decision useful net yield that adjusts for common real world frictions like vacancy time, management fees, and annual operating expenses. It does not try to model mortgage payments, tax bands, depreciation, or capital growth. Those topics matter, but they change the question. This calculator stays locked on rental yield as a property level performance signal.

Start with the two numbers you usually know: the property value (or purchase price) and the monthly rent. From those, gross yield is calculated as annual rent divided by property value. Gross yield is useful because it is fast and comparable, but it can be misleading if you assume every month is paid and there are no costs. That is why the calculator includes an optional advanced section. Vacancy allowance lets you reduce rent for expected empty periods, late payment, or turnover gaps. Management or letting fees reflect what a property manager or agent takes as a percentage of rent collected. Annual operating expenses bundle recurring costs like rates, levies, insurance, routine maintenance, compliance certificates, garden services, and small repairs. When you add these optional inputs, the calculator estimates effective annual rent and then net operating income, which is the basis for net yield.

The results are shown in practical terms. You will see gross yield and net yield as percentages, plus the yearly figures behind them so you can sanity check the math. If the net yield drops sharply compared to gross, it is usually telling you that the property relies on optimistic assumptions (full occupancy, no fees, or undercounted expenses). If gross and net are close, the deal is more resilient to normal operating realities. Use the numbers to compare properties on the same basis and to set a rent target when negotiating. If you want to make the result more accurate, your best lever is not adding more inputs, it is improving the realism of the three optional items: vacancy allowance, management fee rate, and annual operating expenses.

Assumptions and how to use this calculator

• Gross yield uses annual rent = monthly rent × 12 and ignores all costs and vacancies.
• Vacancy allowance reduces rent by a percentage to reflect expected empty months or non-payment (default is 5% if you enter nothing).
• Management/letting fees are applied as a percentage of effective rent collected, not on the advertised rent.
• Annual operating expenses are treated as one combined yearly number and exclude mortgage payments, taxes, and large once-off renovations.
• Property value is used as the denominator for yield; if you want a stricter view, use total acquisition cost (price plus transfer and legal fees) as the value input.

Common questions

What is the difference between gross yield and net yield?

Gross yield is the simplest ratio: annual rent divided by property value. Net yield adjusts that rent for vacancy time and then subtracts operating costs and management fees before dividing by property value. Gross is a quick comparison tool; net is closer to what the property can actually produce before financing and taxes.

What should I enter for annual operating expenses?

Use a realistic yearly total for recurring costs you expect even in an average year. Common items include rates, levies, insurance, routine maintenance, compliance certificates, and basic services. If you do not know, start with a conservative estimate rather than zero, then refine it after you get actual quotes or historical statements.

What vacancy percentage is reasonable?

A small vacancy allowance is normal even for well located properties because tenant turnover and late starts happen. If you have strong local demand and stable tenants, vacancy might be low. If the area is seasonal, volatile, or has higher churn, increase it. The calculator works with any percentage, but unrealistic values will distort net yield quickly.

Does this include mortgage payments or interest?

No. Yield here is property level performance before financing. Once you add a loan, the decision shifts to cash-on-cash return and monthly cash flow after debt service, which are different metrics and depend heavily on your interest rate and deposit.

Should I use purchase price or market value?

For deal comparison and negotiation, purchase price is usually the right input. If you are evaluating a property you already own, market value can be useful to understand what yield you are getting on today’s value. The key is consistency: compare properties using the same basis.