🏠 Rental Yield Calculator
Calculate gross and net rental yield, cap rate, and annual cash flow for your investment property.
Enter your values
- Gross Yield6.4%
- Cap Rate4.48%
- Annual Cash Flow-€480.00
- Monthly Cash Flow-€40.00
What this means
- Low yield: gross 6.4%, net 4.48% — consider negotiating price or raising rent.
- Negative monthly cash flow of €40.00 — property costs exceed rental income.
- Cap rate of 4.48% (before financing costs).
Visual results
Detailed breakdown
| Year | Annual Rent | Annual Expenses | Annual Cash Flow | Net Yield |
|---|---|---|---|---|
| 1 | €9,120.00 | €2,400.00 | -€480.00 | 4.48% |
| 2 | €9,393.60 | €2,448.00 | -€254.40 | 4.63% |
| 3 | €9,675.41 | €2,496.96 | -€21.55 | 4.79% |
| 4 | €9,965.67 | €2,546.90 | €218.77 | 4.95% |
| 5 | €10,264.64 | €2,597.84 | €466.80 | 5.11% |
| 6 | €10,572.58 | €2,649.79 | €722.79 | 5.28% |
| 7 | €10,889.76 | €2,702.79 | €986.97 | 5.46% |
| 8 | €11,216.45 | €2,756.85 | €1,259.60 | 5.64% |
| 9 | €11,552.94 | €2,811.98 | €1,540.96 | 5.83% |
| 10 | €11,899.53 | €2,868.22 | €1,831.31 | 6.02% |
About this calculator
What Is Rental Yield?
Rental yield measures the annual income a property generates relative to its purchase price. It’s the essential first number every property investor should calculate before committing capital.
Gross yield is the simplest form: annual rent divided by property value, expressed as a percentage. It ignores expenses, making it useful only for quick comparisons between properties.
Net yield is more meaningful — it subtracts vacancy losses and annual operating expenses (insurance, maintenance, management fees, property taxes) from gross rent before dividing by property value. Net yield tells you the real return before mortgage costs.
The Formulas
Gross Yield = (Monthly Rent × 12) ÷ Property Value × 100
Effective Rent = Annual Rent × (1 − Vacancy Rate)
Net Yield = (Effective Rent − Annual Expenses) ÷ Property Value × 100
Cap Rate = Net Operating Income ÷ Property Value × 100
Annual Cash Flow = NOI − Annual Mortgage PaymentsThe cap rate (capitalization rate) equals Net Operating Income divided by property value. Unlike yield, it ignores how the property is financed — making it the standard metric for comparing properties regardless of mortgage terms.
How to Interpret the Results
| Net Yield | Assessment |
|---|---|
| Above 8% | Excellent — strong cashflow potential |
| 5% – 8% | Good — competitive in most markets |
| Below 5% | Low — may rely on capital appreciation |
Positive cash flow means the property earns more in rent than it costs to hold (expenses + mortgage). Negative cash flow means you’re subsidizing the property from other income — acceptable in high-growth markets, risky otherwise.
Common Use Cases
- Comparing properties: Use cap rate (not yield) when properties have different financing structures.
- Setting rent: Work backwards from your target yield to find the minimum monthly rent needed.
- Stress-testing vacancy: Increase vacancy rate to 10–15% to see how your returns hold under a bad year.
- Refinancing decisions: Add a new mortgage payment to see how cash flow changes before signing.
Frequently asked questions
What is the difference between gross and net rental yield?
Gross yield is annual rent divided by property value. Net yield subtracts vacancy losses and operating expenses, giving a more realistic return figure.
What is a good rental yield?
A net yield above 8% is considered excellent, 5-8% is good, and below 5% may not justify the investment risk depending on your market.
What is cap rate and how does it differ from yield?
Cap rate (capitalization rate) measures return on investment before financing costs. It equals Net Operating Income divided by property value, making it useful for comparing properties regardless of mortgage terms.