What is rental yield?
Rental yield expresses a property's annual rental income as a percentage of its value. It is a quick way to compare the income potential of different properties or markets.
The formulas
Gross yield = Annual rent / Property value × 100
Net yield = (Annual rent − Annual expenses) / Property value × 100
Gross yield is the headline figure; net yield is more realistic because it subtracts operating expenses.
How to use it
- Enter the annual rent.
- Enter the property value.
- Optionally, enter annual expenses to see net yield.
For example, $24,000 of annual rent on a $400,000 property is a 6.00% gross yield.
Gross vs net
Gross yield overstates real returns because it ignores costs. Always look at net yield — and remember that yield, like cap rate, ignores financing and appreciation.