Calculate the gross and net rental yield of an investment property, plus the cash-on-cash return on the money you put in, to compare rentals quickly.
Gross yield, net yield and cash-on-cash
Gross yield = Yearly rent ÷ property price × 100
Net yield = (Yearly rent − vacancy − operating costs) ÷ property price × 100
Cash-on-cash = Yearly cash flow after mortgage ÷ cash invested × 100
- Gross yield is quick for comparing listings but ignores costs.
- Net yield (also called the cap rate when based on net operating income) shows what the property really earns.
- Cash-on-cash return shows the return on the money you personally put in when you use a mortgage.
Worked example
A $250,000 property rents for $1,800 a month, or $21,600 a year. Gross yield is 8.64%. With $7,000 a year of property tax, insurance, repairs and management, net operating income is $14,600, a net yield of 5.84%.
Costs to include
- Property tax and insurance
- Repairs and maintenance (often budgeted at 1% or more of the price per year)
- Property management (often 8% to 10% of rent)
- HOA fees, utilities you pay, and accounting
- Vacancy: a month empty each year is about 8% of rent
Frequently asked questions
What is a good rental yield?
It depends on the market. Higher yields often come with higher risk or more management work. Compare properties in the same area using the same assumptions.
Does the yield include appreciation?
No. Yield measures income only. Property value changes are a separate, uncertain part of the return.
Related tools
Results are estimates for planning and education only. They are not financial, tax, legal or medical advice. Check important numbers with a qualified professional.