Rental Yield Calculator
Rental yield shows the return on a property's price from rent. Gross yield uses the rent alone. Net yield takes off the running costs, which gives a more useful picture.
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How it works
Gross yield is the yearly rent divided by the price, as a percent. Net yield is the yearly rent less yearly running costs, divided by the price, as a percent.
Running costs can include property tax, insurance, repairs and management. The mortgage is left out, so net yield is not the return on the cash you put in.
Worked example
A property at $300,000.00 renting for $2,500.00 a month, with $6,000.00 a year in running costs, has a gross yield of 10% and a net yield of 8%.
Questions
Which yield should I look at?
Net yield is closer to what the property keeps, but it is only as good as your cost figures. Look at both.
Does net yield include the mortgage?
No. It is before financing. The return on your own cash is a different measure.
Why is the gross yield higher?
It leaves out costs, so it is always the higher of the two when costs are above zero.
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