Understanding Real Rental Yield
Gross rental yield looks good on paper, but the true return on a rental property depends on what you actually invest and what costs you incur. This calculator computes the net yield on your actual out-of-pocket capital: purchase price minus any deposits received and minus any mortgage borrowed.
Net yield = (annual rent โ annual mortgage interest โ annual property tax and costs) รท actual capital invested ร 100. A positive net yield means the property pays for its own costs and returns cash to you. A negative net yield means you're subsidizing the property, relying on capital appreciation for returns.
This calculator does not include vacancy allowance or maintenance costs. For conservative analysis, add an estimated 5โ10% of annual rent to the "other costs" field.
Frequently Asked Questions
Use the actual purchase price paid. If calculating yield on current market value (cap rate style), enter the current estimated value instead and set deposit and loan to 0.
A negative net yield means holding costs exceed rental income. This is common in expensive markets where investors rely on long-term price appreciation rather than cash flow.