Investment Yield Calculator

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How to Use the Investment Yield Calculator

This calculator measures the Gross Rental Yield of a property, which is a simple way to compare the income-generating potential of different properties relative to their price.

• Total Purchase Price ($): The full cost to acquire the property, including the purchase price and any initial repair costs.
• Monthly Rent ($): The total rent collected per month.

Understanding Rental Yield

Rental Yield is a simple but effective metric for quickly screening investment properties. The formula is:

Gross Rental Yield = (Annual Rental Income / Total Property Cost) * 100

Gross Yield vs. Net Yield

It is critical to understand that this calculator measures Gross Yield. It only looks at income relative to cost. Net Yield is a more advanced metric that subtracts operating expenses (like taxes, insurance, and maintenance) from the income before doing the calculation. A property can have a high Gross Yield but a low (or even negative) Net Yield if its expenses are very high.

Yield vs. Cap Rate vs. ROI

How does Yield differ from other metrics?

• Yield: The simplest, quickest screening tool. Good for initial comparisons.
• Cap Rate: A better metric because it uses Net Operating Income (income after expenses), making it more accurate than Gross Yield for comparing properties.
• ROI (Cash-on-Cash Return): The most specific metric for you, the investor, as it measures the return on the actual cash you invested.

What To Do With Your Results

Think of the Gross Rental Yield as a first-pass filter to help you decide which properties are worth analyzing further.

A Quick Comparison Tool

If you are looking at three different properties, calculating the Gross Yield for each can instantly tell you which one has the best income potential relative to its price. A higher yield is generally better.

What is a "Good" Yield?

This depends entirely on the market. In some low-cost areas, investors might look for yields of 8-10% or more. In expensive coastal cities, a yield of 4-5% might be considered very good. The key is to compare properties within the same market.

Always Dig Deeper

Never make an investment decision based on Gross Yield alone. A property with a high yield might have a hidden issue, like extremely high property taxes or deferred maintenance. If a property has a promising yield, your very next step should be to use the Property ROI Calculator to perform a complete analysis that includes all expenses.