Calculate gross and net rental yield from property value, annual rent, and operating expenses for real estate investment comparison.
A rental yield answers one question: how much income does a property return relative to what it costs? Enter the property value, the annual rent, and your operating expenses, and this tool returns two percentages: the gross yield (rent alone) and the net yield (rent minus expenses). The surprise for most users is the gap between them. Expenses such as property tax, insurance, and maintenance routinely consume a third of gross rent, and neither figure accounts for mortgage interest, so a 6% gross yield can be a 4% net yield and a near-zero cash-on-cash return on a leveraged purchase.
A concrete input and expected output from the current implementation.
Input
Property value $500,000; annual rent $30,000; annual operating expenses $8,000
Expected output
Gross yield 6.0% ($30,000 / $500,000). Net yield 4.4% (($30,000 - $8,000) / $500,000).
Gross yield ignores expenses, so it is rent divided by value. Net yield deducts the $8,000 of expenses, leaving $22,000 of income, which is 4.4% of the $500,000 value.
Gross yield divides annual rent by property value and multiplies by 100. The result is a percentage that is comparable across properties of any price: a $300,000 house renting for $1,500 a month and a $600,000 house renting for $3,000 both return 6%, which is the point. Price differences disappear and income efficiency is what remains.
Net yield starts with the same annual rent and subtracts annual operating expenses: property taxes, insurance, maintenance, and management fees, plus vacancy if you enter it. The remainder is divided by property value. Because expenses come out of rent rather than value, the effect compounds: $8,000 of expenses on $30,000 of rent cuts a 6% gross yield to 4.4%.
Sellers usually quote gross yield, which ignores expenses. Property tax, insurance, maintenance, management, and vacancy together often take 25-40% of gross rent, so a quoted 7% can be a real 4-5% net. Enter every expense you can quantify, including a vacancy allowance, before trusting the comparison.
Only if you bought for cash and the property never sits vacant. With a mortgage, your return on the cash you actually invested is a different number, because the rent you keep flows back against a smaller equity stake. The tool measures the property's income, not the return on your financing.
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