Rental Yield Calculator

Net rental yield expresses net operating income — rent after vacancy and operating expenses, but before mortgage payments — as a percentage of everything you put into the purchase, including closing costs and initial repairs. Cash-on-cash return goes a step further and measures the return only on the cash you invested after also subtracting mortgage payments, which is usually the more useful number if you are financing the purchase.

Start with the purchase price and everything it actually takes to get the unit rent-ready: closing costs and any upfront repairs. These belong in the total cost basis used for gross and net yield, and in the cash-invested figure used for cash-on-cash return.

Enter the rent you expect to collect and a realistic vacancy rate rather than assuming full occupancy every month. Then fill in the recurring costs of ownership — taxes, insurance, HOA, maintenance and management — as accurately as you can.

If you are financing the purchase, the down payment, rate and term drive the mortgage payment used for cash flow, cash-on-cash return and DSCR. Set the down payment to 100% to see the unleveraged cap rate on its own.

Net operating income is the base for most of the yield figures below.

NOI = (rent + other income) × (1 − vacancy %) − operating expenses

Gross yield = gross annual income ÷ total cost

Net yield (cap rate) = NOI ÷ total cost

Annual cash flow = NOI − annual mortgage payments

Cash-on-cash return = annual cash flow ÷ cash invested

DSCR = NOI ÷ annual mortgage payments

Total cost is purchase price plus closing costs plus initial repairs. Cash invested is the down payment plus closing costs plus initial repairs.

A $300,000 property with $6,000 in closing costs and $5,000 in repairs has a total cost of $311,000. Renting for $2,200/month with a 5% vacancy allowance gives an effective annual income of about $25,080. After $9,500 in operating expenses, NOI is roughly $15,580 — a net yield (cap rate) of about 5%.

With 20% down ($60,000) plus $11,000 in closing costs and repairs, cash invested is $71,000. A 6.5% mortgage on the $240,000 loan costs about $1,517/month, or $18,200/year. Cash flow is negative by roughly $2,620/year in this scenario, a cash-on-cash return of about -3.7% — showing why financing terms matter as much as the purchase price.

Location and rent growth

Markets with strong rent growth can offset a lower starting yield over time, while high-yield markets sometimes carry more price or vacancy risk.

Financing terms

Interest rate, down payment and loan term all change the mortgage payment, which drives the gap between cap rate and cash-on-cash return.

Vacancy and tenant turnover

Higher turnover means more vacancy days, more make-ready costs and more leasing fees, all of which reduce effective income.

Property age and condition

Older properties typically need a higher maintenance reserve and are more prone to unexpected capital expenses.

Self-management vs. hiring a manager

Management fees directly reduce net yield but self-managing has real time costs that are easy to undervalue.

• Using gross yield to compare deals

  Two properties with identical gross yield can have very different net returns once taxes, insurance, HOA and management are factored in.

• Ignoring vacancy entirely

  Assuming 100% occupancy every year overstates income and understates how much cash flow can actually be relied on.

• Underbudgeting maintenance and capital expenses

  Routine maintenance is not the same as major repairs like a roof or HVAC replacement — both need to be planned for.

• Forgetting closing costs and initial repairs in the return calculation

  Cash-on-cash return should reflect everything spent to get the property rent-ready, not just the down payment.

• Comparing cap rate across very different risk levels

  A higher cap rate in a declining market is not automatically a better deal than a lower cap rate in a stable, appreciating one.

• Compare net yield or cap rate, not gross yield, when shopping between properties.
• Stress-test the numbers with a higher vacancy rate and a rate increase if you plan to refinance later.
• Keep a separate capital-expense reserve beyond the routine maintenance percentage for big-ticket items.
• Get a local property manager's actual fee schedule rather than assuming a flat percentage.
• Recalculate cash-on-cash return whenever the mortgage rate or down payment assumption changes — leverage moves it quickly.

This calculator does not model income taxes, depreciation, appreciation, rent growth or eventual sale proceeds, all of which affect a property's total return. Actual maintenance and vacancy will vary year to year rather than following a flat percentage, and financing terms for investment properties can differ from the assumptions you enter here.

What this calculator assumes

• Rent, vacancy rate and expense percentages stay constant over the year being analyzed.
• Maintenance and management costs are modeled as a percentage of rent rather than fixed dollar amounts.
• The mortgage is a standard fixed-rate, fully amortizing loan.
• Cash invested includes the down payment, closing costs and initial repairs, but not ongoing reserves.
• Property tax, insurance and HOA are entered as their actual annual or monthly figures rather than estimated.

What it does not account for

• Does not account for income taxes, depreciation or the tax benefits of owning rental property.
• Does not project appreciation, rent growth or proceeds from a future sale.
• Treats maintenance and vacancy as flat percentages rather than variable, lumpy real-world costs.
• Does not model closing costs or fees on a future refinance or sale.

• Freddie Mac — Investment property financing — General guidance on investment-property loan requirements.
• IRS — Residential rental property — Rules on rental income, deductible expenses and depreciation.