How to use this rental yield calculator
Start with the property price and the rent, then choose whether the rent is quoted per month (usual in the US, Canada and the UK) or per week (usual in Australia and New Zealand). The gross yield appears straight away.
- Open "More options" for net yield. Add purchase costs, the management fee, vacancy in weeks per year, property tax or council rates, landlord insurance, maintenance and HOA or strata fees. All costs are yearly totals, apart from the management fee, which is a percentage of rent collected.
- Set a target yield. Choose whether the target applies to gross or net yield. The results show the weekly and monthly rent you would need at this price, and the most you could pay at this rent.
- Check where the rent goes. The bar under the results splits every dollar of rent between running costs and the net income you keep.
Rental yield formulas
Gross yield = annual rent ÷ property price × 100Net yield = (annual rent − annual expenses) ÷ (price + purchase costs) × 100 Annual rent = weekly rent × 52, or monthly rent × 12 · annual expenses = vacancy + management + property tax or rates + insurance + maintenance + HOA or strata
Gross yield is the headline figure you see on listings because it only needs two numbers. Net yield is more honest: it takes off what it costs to own and let the property, and counts the stamp duty or closing costs you paid to buy it. Some people calculate net yield on the price alone. If you want to match that convention, set purchase costs to zero.
Vacancy is entered in weeks because that is how most landlords think about it: two empty weeks between tenants costs two weeks of rent. The management fee is charged on the rent actually collected, so it falls slightly when the property is empty.
Worked example
A $450,000 property rents for $2,400 a month, which is $28,800 a year or about $554 a week. The gross yield is $28,800 ÷ $450,000 = 6.4%.
Now the running costs. Two weeks of vacancy loses $1,108 of rent. An 8% management fee on the $27,692 collected is $2,215. Add $4,500 of property tax, $1,500 of landlord insurance and $2,500 for maintenance, and expenses come to $11,823, or 41% of the rent. That leaves net income of $16,977 a year.
With $13,500 of purchase costs, the total cost is $463,500, so the net yield is $16,977 ÷ $463,500 = 3.66%.
To reach a 7% gross yield at this price, rent would need to be $2,625 a month (about $606 a week), $225 more than now. At the current rent, the price would need to be $411,429 or less.
What counts as a good rental yield?
There is no universal benchmark, because yield is only half of a property's return. The other half is capital growth. In many big-city markets, prices have risen faster than rents for years, so yields are low but owners have been rewarded with growth. Regional towns and some apartment markets often show higher yields with slower or less certain growth. Compare a property's yield with similar properties nearby rather than with a national figure.
The most useful comparison is with your own cost of money. In the example, the net yield of 3.66% is well below a 7% loan rate, so if you borrowed most of the price, the rent would not cover the interest. That is not necessarily a bad investment, but it means you would be relying on growth and topping up the property each year. The investment property calculator shows that cash flow month by month, and the mortgage calculator gives the repayment.
Tip: when comparing listings, work out net yield for each one with the same cost assumptions. Two properties with the same gross yield can have very different net yields once strata fees, insurance and property tax are added.
Weekly and monthly rent: the conversion trap
A month is not four weeks. There are 52 weeks in a year but only 48 in twelve four-week "months", so multiplying weekly rent by 4 understates the monthly figure by about 8%. A rent of $600 a week is $2,600 a month (600 × 52 ÷ 12), not $2,400. On the example price that is a gross yield of 6.93%, not 6.4%.
The same trap works in reverse when you compare an Australian listing (weekly rent) with a US one (monthly rent). Always convert both to an annual figure first. The hint under the rent field shows the weekly, monthly and yearly equivalents as you type.
Which costs belong in net yield
Include the costs of owning and letting the property:
- Management and letting fees, or zero if you self-manage. In the example, managing it yourself lifts net yield from 3.66% to 4.14%.
- Vacancy: a realistic allowance for empty weeks and the time it takes to find a tenant.
- Property tax or council rates and any water or land charges the owner pays.
- Landlord insurance, which usually costs more than a standard home policy.
- Maintenance and repairs, including servicing and replacing appliances over time.
- HOA dues or strata levies. These hit apartment yields hard: adding $3,600 a year to the example drops net yield to 2.89%.
Leave out mortgage repayments, depreciation and income tax. They depend on the buyer rather than the property, and they belong in a cash flow or tax calculation instead. If you are weighing up whether to buy a home to live in rather than to let, try the rent vs buy calculator, and check what you can borrow with the home affordability calculator.
Rental yield terms in different countries
| Concept | United States | Australia / NZ | United Kingdom |
|---|---|---|---|
| Main return measure | Cap rate | Gross and net rental yield | Gross and net rental yield |
| How rent is quoted | Per month | Per week | Per calendar month (pcm) |
| Main purchase cost | Closing costs | Stamp duty (Australia) | Stamp duty land tax (England) |
| Local property charge | Property tax | Council rates | Council tax (often paid by the tenant) |
| Building fees | HOA dues | Strata levies or body corporate fees | Service charge |
Frequently asked questions
What is the difference between gross and net rental yield?
How do I calculate rental yield from weekly rent?
Is rental yield the same as cap rate?
What is a good rental yield?
Should mortgage repayments be included in net yield?
Does a higher yield always mean a better investment?
This calculator gives estimates for education and planning. It is not financial advice, and your lender's figures may differ. See how we calculate.