Rental Yield Calculator
Gross and net rental yield, cap rate and cash-on-cash return for a rental property
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Works out what a rental property returns each year from its price, rent, costs and loan. It shows gross and net yield, the cash-on-cash return on the money you put in, the monthly cash flow, and how these change with the interest rate and vacancy.
How to use
- Enter the "Purchase price", "Purchase costs", "Monthly rent" and any "Tenant deposit you hold".
- Add "Operating costs per year" and the "Vacancy rate", then the loan amount, rate and "Repayment" type. The "Cash-on-cash return" appears at once.
- Check the table under "If the rate or vacancy changes" to see the return or monthly cash flow in worse conditions.
- Under "Work back from a target yield", enter a target to find the purchase price or monthly rent that reaches it.
How it works
- Gross yield = monthly rent × 12 ÷ price. Net yield (cap rate) = (monthly rent × 12 × (1 − vacancy) − operating costs) ÷ price.
- Cash invested = price + purchase costs − loan − deposit. Cash-on-cash return = (NOI − first-year loan payments) ÷ cash invested.
- Taxes, changes in property value and interest earned on the deposit are not included. This is arithmetic on your numbers, not investment advice.
Questions and answers
- What is a good way to calculate rental yield?
- Gross yield divides a year's rent by the price. Net yield first subtracts vacancy and operating costs. Cash-on-cash also subtracts loan payments and divides by the cash you actually invested.
- What is the difference between cap rate and cash-on-cash return?
- Cap rate ignores financing: NOI ÷ price. Cash-on-cash includes the loan: NOI minus loan payments, divided by your own cash. With no loan and no deposit they differ only by the purchase costs.
- Does a loan increase my return?
- If the loan rate is below the net yield, borrowing raises the cash-on-cash return; if it is above, it lowers it. The sensitivity table shows the effect of higher rates.
- Is principal repaid counted as a cost?
- Yes for cash flow, because the money leaves your account. The page also shows the cash-on-cash return without principal repaid, for when you treat it as equity you build.