Rental yield calculator
Gross and net rental yield, plus a quick check against the 1% rule.
- ๐บ๐ธ US federal & state rules
Gross rental yield
10.25%
Net yield after expenses: 7.15%
- Net yield
- 7.15%
- Yearly rent
- $26,400
- 1% rule
- Misses (0.88% a month)
- Rent needed for 1%
- $2,500
This is an example. Enter your numbers above and press the button to see your own result.
- The 1% rule is a quick screen used by investors, not a guarantee of profit. In high-priced markets few properties pass it.
- Net yield here ignores the mortgage. For returns with a loan, use the cash-on-cash calculator.
Show the math
| Total cost | $250,000 + $7,500 = $257,500 |
|---|---|
| Gross yield | $26,400 รท $257,500 = 10.25% |
| Net yield | ($26,400 โ $8,000) รท $257,500 = 7.15% |
| 1% rule | $2,200 รท $250,000 = 0.88% |
What to do next
How it works
Total cost is the price plus closing and repair costs. Gross yield is 12 months of rent divided by total cost. Net yield subtracts yearly expenses from rent first. The 1% rule compares monthly rent to the purchase price.
Things to keep in mind
None of these include the mortgage. A property can have a decent net yield and still lose money each month once loan payments are added.
Frequently asked questions
How do I calculate rental yield?
Gross yield is yearly rent divided by what you paid. $26,400 a year on $257,500 is a 10.25% gross yield. Net yield subtracts expenses first.
What is the 1% rule?
Monthly rent should be at least 1% of the purchase price. A $250,000 property passes with $2,500 a month or more.
Is gross or net yield more useful?
Net yield, because expenses often take 35% to 50% of rent. Gross yield is handy only for quick comparisons between listings.