Yield is the return a rental pays on its price, before financing and before appreciation. This calculator shows both the gross number listings advertise and the net number you actually bank, plus the price-to-rent ratio that puts the 1% rule in real units.
Rental listings quote one number: annual rent divided by price. It is easy to compute and easy to inflate, because it pretends the property costs nothing to run. A tenant leaves and the unit sits for three weeks, a water heater dies, the county reassesses, a property manager takes a cut. None of that appears in the gross figure. Net yield subtracts these operating costs from rent first, and the residue is the money that actually reaches your account. The distance between the two yields is the single most underestimated number in beginner real estate analysis.
In the default example the gap is more than three points. A 350,000 dollar property renting for 2,400 dollars a month collects 28,800 dollars a year, a gross yield of 8.23 percent that looks stronger than a stock dividend. Then the operating bill arrives: 1,440 dollars of vacancy, 2,304 dollars of maintenance, 2,304 dollars of management, 3,185 dollars of property tax, and 1,800 dollars of insurance, totaling 11,033 dollars. Net operating income is 17,767 dollars and the net yield falls to 5.08 percent. Roughly 38 cents of every rent dollar never becomes income.
This is also why net yield here and the cap rate on the rental property calculator agree: both are NOI divided by value. Cap rate sounds like a different, more professional metric. It is the same arithmetic with a different name, and any source whose cap rate skips vacancy or management is quoting a gross number in disguise.
Variables in plain terms. Vacancy is modeled as a percentage of rent rather than a lump sum, so a higher rent automatically budgets a larger vacancy reserve. Maintenance at 8 percent of rent follows the common underwriting range of 5 to 10 percent for older single-family homes; a new-build can run lower, a 1970s rental higher. Property tax uses the value-based input because assessments follow price, with the 0.91 percent default drawn from the Tax Foundation's effective rate for owner-occupied homes nationwide. Management only applies if you hire it out, and HOA converts a monthly fee to an annual one. Debt service, income tax, and capital improvements stay out of every figure, which keeps the result a pure property metric you can compare across cities and financing choices.
The property is worth 350,000 dollars and rents at 2,400 dollars, so annual gross rent is 28,800 dollars. The percentage costs scale with rent: 5 percent vacancy is 1,440 dollars, 8 percent maintenance is 2,304 dollars, 8 percent management is another 2,304 dollars. The value-based costs scale with price: 0.91 percent tax is 3,185 dollars, and insurance adds a flat 1,800 dollars. Expenses total 11,033 dollars, which is 38.3 percent of the rent collected, leaving NOI of 17,767 dollars.
Three outputs describe the deal. Gross yield is 8.23 percent. Net yield is 5.08 percent. Price-to-rent is 12.2, meaning the price equals 12.2 years of gross rent, or 145.8 months of checks before a single expense. Every 100,000 dollars of property carries 686 dollars of monthly rent. None of these numbers says buy or walk; they say what the asset pays, and the next section is about judging that.
Rent is the strongest lever because it moves both sides of the fraction: every extra dollar of rent adds roughly 79 cents of NOI after the 21 percent combined vacancy, maintenance, and management load. Holding the default property constant and moving only rent shows how fast the picture changes.
| Monthly rent (value $350,000) | Gross yield | Net yield | Price-to-rent |
|---|---|---|---|
| $1,750 | 6.00% | 3.32% | 16.7 |
| $2,000 | 6.86% | 3.99% | 14.6 |
| $2,400 (default) | 8.23% | 5.08% | 12.2 |
| $2,800 | 9.60% | 6.16% | 10.4 |
| $3,500 (the 1% line) | 12.00% | 8.06% | 8.3 |
Read the last row carefully, because it deflates the most famous rule in real estate. The 1% rule demands monthly rent of 3,500 dollars on this property, and it does deliver a striking 12 percent gross yield. After realistic operating costs the net yield is 8.06 percent, which is strong but far from the triple-digit-sounding promise. Meanwhile the jump from 2,400 to 2,800 dollars of rent adds a full point of net yield, showing that modest rent improvements beat heroic price negotiation in many markets. Overpaying destroys yield mechanically: the same rent on a 400,000 dollar purchase drops the net yield from 5.08 to 4.33 percent, and a 300,000 dollar purchase lifts it to 6.07 percent with nothing else changing.
First, compare against the riskless alternative. Treasury yields and top high-yield savings rates near 4 to 5 percent pay interest with no vacancy, no evictions, and no 2 a.m. plumbing calls. A net yield of 5.08 percent clears that bar only because rent tends to grow and the property may appreciate; a 3.32 percent net yield at 1,750 dollars of rent does not clear it at all. Yield is the price of your landlord labor, and it should pay more than doing nothing.
Second, compare against the mortgage rate. The default example borrows nothing, but a buyer financing at the 7.28 percent 30-year rate quoted by Freddie Mac in early October 2026 pays more for money than the property earns from it, since the 5.08 percent net yield sits 2.2 points below the loan. Leverage amplifies whatever the spread is, negative as readily as positive. This is the quick screen; for the month-by-month version including principal paydown and sale proceeds, the rental property calculator runs the full simulation.
Third, compare against other properties and markets, which is what yield exists for. Cheap Midwest rentals routinely show net yields above 8 percent with flat prices, while coastal homes in appreciating metros often net 3 to 4 percent. Neither is automatically better. What yield does is force the trade-off into the open: you can see exactly how much appreciation story you are paying for when you accept a thin cash yield, and the ROI calculator folds appreciation and amortization back in when you want the total-return view.
One caution on rent growth: it compounds more slowly than headlines suggest. If rent rises 3 percent a year and the property value also rises 3 percent, yield stays flat forever, because numerator and denominator climb together. Yield only improves if rent outgrows price, which historically happens in recovering neighborhoods and rarely happens in ones already fully priced. For the erosion of money itself rather than the yield, the inflation calculator shows what a fixed rent stream loses to rising costs.
Gross yield is annual rent divided by the property price, and it ignores every cost of owning the place. Net yield subtracts vacancy, maintenance, property tax, insurance, and management before dividing, so it describes the money that actually reaches you. In the default example a 350,000 dollar property renting for 2,400 dollars a month shows a gross yield of 8.23 percent, but after 11,033 dollars of operating costs the net yield drops to 5.08 percent. The gap of more than three points is why listings advertise gross figures and underwriters model net ones.
It depends on what you compare it against. A net yield in the 4 to 6 percent range is typical for single-family homes in appreciating US metros, while 8 percent or more is common in slower-growth Midwest markets where prices are low relative to rent. The honest benchmark is your alternative return: a Treasury or high-yield savings account paying 4 to 5 percent with zero toilets makes a 5 percent net yield look thin unless rent growth or appreciation adds to it. Net yield below your mortgage rate, as in the default example where 5.08 percent sits under a 7.28 percent loan, means leverage destroys return.
The 1% rule says monthly rent should be at least 1 percent of the purchase price, which is the same as a price-to-rent ratio of 100 or a gross yield of 12 percent. On a 350,000 dollar property that demands 3,500 dollars of monthly rent, and this calculator's default rent of 2,400 dollars falls well short with a ratio of 12.2. The 1% rule made sense when mortgage rates sat near 4 percent; at 7 percent borrowing costs it is a screening shortcut for cheap Midwest markets, not a national standard. Price-to-rent expresses the same idea in a form that works at any price point.
Yes, when the input lists match. Cap rate is net operating income divided by property value, and net yield in this calculator is exactly that: the same NOI, the same denominator. Both exclude mortgage payments, income tax, and capital improvements, and both include vacancy and operating expenses. Different sources disagree on the expense list, so always check what went into the number before comparing a listing's cap rate with your own model. This calculator uses vacancy, maintenance, property tax, insurance, management, and HOA, and deliberately leaves debt service out because yield measures the property, not your financing.
Only as a first-pass warning. If the net yield on an all-cash purchase is below the mortgage rate, then every borrowed dollar costs more than the property earns on it, and leverage widens the loss instead of the gain. The default example shows this clearly: a 5.08 percent net yield against a 7.28 percent 30-year mortgage rate means an all-cash buyer earns 5 percent while a financed buyer pays 7 percent for the same asset. The full picture also counts principal paydown and appreciation, which is what the rental property calculator on this site models month by month, but a negative spread is a signal to demand a much better price or rent.
No, and that is deliberate. Yield measures the cash return on the price you pay today, which makes it comparable across properties, cities, and years. Appreciation is a separate return stream that arrives only when you sell or refinance, and it is far less predictable: home prices nationwide have averaged roughly 4 percent annual growth over long horizons, but individual metros have gone a decade with zero real gain. A property with a thin 3 percent net yield and strong appreciation prospects can beat one with a fat 9 percent yield in a stagnant town, but only if the appreciation actually shows up. Judge the cash flow first, then decide what growth story you are paying for.
All calculation logic on this page is implemented from the primary documents below. Each one is listed with the figure it supplies, so any rate or threshold in the result can be traced back to its published source.
Same published formulas, same sourcing standard, one page each.