How to Calculate Gross and Net Rental Yield

Compare the advertised gross yield with income retained after operating costs.

Use the Rental Yield alongside this illustrative example.

A practical example

A property priced at 200,000 and rented for 1,000 per month has 12,000 annual scheduled rent and 6% gross yield. If collected rent is 11,000 after vacancy and operating costs are 3,000, the remaining 8,000 is 4% of the price before financing and tax.

Check the result

Keep vacancy separate from maintenance so you can change one assumption at a time. Check that annual expense figures are not entered as monthly amounts or subtracted twice.

Try a comparison

Keep the hypothetical price at 200,000 and reduce net operating income from 8,000 to 7,000. Net yield falls from 4% to 3.5%. A small-looking annual expense difference can materially change a percentage quoted to one decimal place.

What this does not establish

A yield percentage does not describe loan cash flow, capital growth or an entire investment return. Use consistent definitions when comparing listings.

Report unclear guidance or a result that needs checking.