Gross Rental Yield Calculator Formula

Understand the math behind the gross rental yield calculator. Each variable explained with a worked example.

Use the Gross Rental Yield Calculator

Formulas Used

Gross Rental Yield

gross_yield = (annual_rent / purchase_price) * 100

Annual Rental Income

annual_income = annual_rent

Monthly Yield

monthly_yield = (monthly_rent / purchase_price) * 100

Variables

VariableDescriptionDefault
purchase_pricePurchase Price(USD)250000
monthly_rentMonthly Rent(USD)2000
annual_rentDerived value= monthly_rent * 12calculated

How It Works

Gross Rental Yield

Gross rental yield is the simplest measure of rental property return, using total rent before any expenses.

Formula

Gross Yield = (Monthly Rent x 12) / Purchase Price x 100

Advantages

  • Quick to calculate with minimal data
  • Easy to compare across properties
  • Useful for initial screening before deeper analysis

    • Worked Example

    A property purchased for $250,000 rents for $2,000 per month.

    purchase_price = 250000monthly_rent = 2000
    1. 01Annual rent: $2,000 x 12 = $24,000
    2. 02Gross yield: $24,000 / $250,000 x 100 = 9.60%
    3. 03Monthly yield: $2,000 / $250,000 x 100 = 0.800%

    Frequently Asked Questions

    Why use gross yield instead of net yield?

    Gross yield requires only price and rent data, making it useful when expense details are unavailable. It is ideal for quick market screening before doing full due diligence.

    What is the 1% rule?

    The 1% rule suggests a rental property should rent for at least 1% of its purchase price monthly. A $200,000 property should rent for $2,000+. This corresponds to a 12% gross yield.

    Does gross yield include vacancy?

    No. Gross yield assumes full occupancy. For a more conservative estimate, factor in expected vacancy (typically 5-10%) before calculating.

    Ready to run the numbers?

    Open Gross Rental Yield Calculator