Rental Yield Calculator Formula

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

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Formulas Used

Gross Rental Yield

gross_yield = (annual_rent / property_price) * 100

Net Rental Yield

net_yield = (net_income / property_price) * 100

Annual Net Income

annual_net_income = net_income

Variables

VariableDescriptionDefault
property_priceProperty Purchase Price(USD)300000
monthly_rentMonthly Rental Income(USD)2500
annual_expensesAnnual Operating Expenses(USD)6000
annual_rentDerived value= monthly_rent * 12calculated
net_incomeDerived value= annual_rent - annual_expensescalculated

How It Works

Rental Yield Explained

Rental yield measures the annual return a property generates from rent relative to its purchase price.

Formulas

Gross Yield = (Annual Rent / Property Price) x 100

Net Yield = (Annual Rent - Expenses) / Property Price x 100

Key Differences

  • Gross yield ignores expenses and gives a top-line view
  • Net yield subtracts operating costs for a more realistic picture
  • Neither accounts for financing costs or capital appreciation

    • Worked Example

    A $300,000 property rents for $2,500/month with $6,000 annual expenses.

    property_price = 300000monthly_rent = 2500annual_expenses = 6000
    1. 01Annual rent: $2,500 x 12 = $30,000
    2. 02Gross yield: $30,000 / $300,000 x 100 = 10.00%
    3. 03Net income: $30,000 - $6,000 = $24,000
    4. 04Net yield: $24,000 / $300,000 x 100 = 8.00%

    Ready to run the numbers?

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