Net Yield Calculator
Find your net yield in seconds and see how far it sits below the headline gross yield. Enter your income (monthly or annual rent for a property), subtract annual running costs and a vacancy allowance, and divide by the investment value, with optional purchase costs added to the net yield’s denominator. The result comes with the gross yield beside it, the dollar gap between the two, a worked formula line you can audit, and a plain verdict band.
Estimate only. Yield is shown before tax and excludes financing costs unless you include them in annual costs.
Quick Answer
A $250,000 property renting for $2,000 a month, with $6,000 of annual costs, a 5% vacancy rate and $8,000 of purchase costs, returns a net yield of 6.51% on net income of $16,800, against a gross yield of 9.60%. Costs and vacancy take 3.09 percentage points off the headline figure, which is the gap most listing yields never show you.
Key takeaways
- Net yield, not gross, is the number that describes what you keep: on the worked example the honest figure is 6.51%, not the 9.60% a listing would quote.
- Vacancy is a real cost even in a strong market. Skipping the 5% allowance here would flatter the net yield from 6.51% up to 6.98% on paper and change nothing in the bank.
- Purchase costs belong in the net yield’s denominator and nowhere else: they are capital you tied up, not income you earned.
- Every result includes the full formula line with your numbers substituted in, so any figure can be checked with a phone calculator in under a minute.
- Quick Answer
- How to use the net yield calculator
- The net yield formula, and one correction worth naming
- Worked example, checked against this exact tool
- Gross yield vs net yield: two numbers, two jobs
- Why vacancy belongs in the calculation
- Should purchase costs go in the denominator?
- The verdict bands this calculator uses
- What competing calculators miss
- Frequently asked questions
- Add This Calculator to Your Website
- References
How to use the net yield calculator
Fill in six fields, click Calculate, and read the net yield first. The gross yield, net income, gap and verdict in the results box all describe the same property from different angles.
- Enter the income and its period: monthly rent is multiplied by 12 automatically. If you think in annual figures, switch the period to Annual and enter the year’s rent directly; both routes give identical results ($2,000 monthly and $24,000 annual produce the same 6.51% on the worked example).
- Enter a full year of costs: management, insurance, maintenance, property taxes, service charges. Enter 0 only if there are genuinely no costs; leaving the field blank is an error, on purpose, because a forgotten costs field is the most common way yields get overstated.
- Add a vacancy allowance: optional, and blank means 0%. A 5% allowance is roughly two and a half empty weeks a year. Negative entries are treated as 0 and anything over 100% is rejected.
- Enter the investment value, then purchase costs if you want them counted: purchase costs (transfer tax, legal fees, refurbishment) are added to the net yield’s denominator only. Leave the field blank to report the standard version against value alone.
- Read the verdict against the bands below: the calculator grades the net yield from Negative through Exceptional using fixed thresholds, and prints the exact formula it used with your numbers in it.
The net yield formula, and one correction worth naming
Net yield = ((annual income × (1 − vacancy rate)) − annual costs) ÷ (investment value + purchase costs) × 100. Gross yield = annual income ÷ investment value × 100, before any costs at all.
Gross yield = annual income ÷ value × 100
The two denominators differ deliberately. Gross yield is defined on the property’s value alone; that is the definition used across the rental-yield literature and by the major landlord tools, because “gross” means before every cost, including buying costs. Net yield in this calculator divides by value plus purchase costs, so it reads as the return on the cash actually committed.
One correction, stated plainly: an earlier version of this calculator divided the gross figure by value plus purchase costs too, which understated gross yield whenever purchase costs were entered (9.30% instead of 9.60% on the worked example) and shrank the reported gross-to-net gap. That has been fixed to the standard definition. The net yield calculation itself was correct and has not changed; every net figure quoted from the old version still stands.
The closest cousin of net yield is the cap rate, which divides net operating income by value in a single step; the cap rate calculator shows how sellers and lenders quote that version, and comparing the two is a quick way to spot a listing whose “yield” quietly excludes vacancy.
Worked example, checked against this exact tool
A property worth $250,000 rents for $2,000 a month ($24,000 a year). With a 5% vacancy rate, effective income is $22,800; annual costs are $6,000; purchase costs were $8,000. Net income = $22,800 − $6,000 = $16,800. Net denominator = $250,000 + $8,000 = $258,000. Net yield = $16,800 ÷ $258,000 × 100 = 6.51%, against a gross yield of $24,000 ÷ $250,000 × 100 = 9.60%.
Five more runs of the same calculator, covering the cases readers actually test, are tabulated below. Each row reproduces exactly in the tool.
| Case | Net yield | Gross yield | Net income | Gap |
|---|---|---|---|---|
| Worked example ($2,000/mo, $6,000 costs, 5% vacancy, $250,000 + $8,000) | 6.51% | 9.60% | $16,800.00 | 3.09 pts |
| Same property, purchase costs left blank | 6.72% | 9.60% | $16,800.00 | 2.88 pts |
| Same property, no vacancy allowance | 6.98% | 9.60% | $18,000.00 | 2.62 pts |
| High-cost case ($3,000/mo, $20,000 costs, 10% vacancy, $400,000 + $15,000) | 2.99% | 9.00% | $12,400.00 | 6.01 pts |
| Strong case ($1,500/mo, $3,000 costs, no vacancy, $180,000) | 8.33% | 10.00% | $15,000.00 | 1.67 pts |
| Loss-making case ($1,000/mo, $15,000 costs, 20% vacancy, $200,000) | −2.70% | 6.00% | −$5,400.00 | 8.70 pts |
Gross yield vs net yield: two numbers, two jobs
Gross yield is a screening number; net yield is a decision number. Use gross to sort a list of listings quickly, and net to decide whether any single property deserves your money.
Gross yield: the listing number
- Annual income ÷ property value, nothing subtracted.
- Fast and comparable across listings, which is why agents quote it.
- Ignores vacancy, management, insurance, maintenance and tax, so it always flatters.
- On the worked example: 9.60%.
Net yield: the ownership number
- Income after vacancy and a year of running costs, divided by value plus purchase costs.
- Slower to compute, because it needs honest cost figures.
- The right basis for comparing two properties, or a property against a bond or dividend yield.
- On the worked example: 6.51%.
Both figures here are pre-tax, as yields conventionally are. If you want the version that survives your tax return, the after-tax yield calculator applies a tax rate to the same kind of income stream. Leased and commercial assets use a close variant of the same ratio, covered by the lease yield calculator.
Why vacancy belongs in the calculation
Most beginner calculations assume twelve months of rent, but homes sit empty between tenancies, for viewings, cleaning, repairs and simple bad luck. The Census Bureau’s Housing Vacancies and Homeownership survey has put the national rental vacancy rate in the mid-single digits in recent years, and the Federal Reserve Bank of St. Louis publishes the same series quarterly, so a zero-vacancy assumption is not conservative; it is just wrong for almost every real property.
Enter your market’s real number. Student lets and short-term rentals can run 10% or more, long-let family homes in tight markets sit near 3%, and 5% (about two and a half weeks) is a defensible default when you have no local figure. The worked example shows the cost of optimism: dropping the allowance from 5% to 0% lifts the net yield from 6.51% to 6.98% without earning you a single extra dollar.
Should purchase costs go in the denominator?
For the net yield, yes, and this calculator puts them there; for the gross yield, no, by definition. Purchase costs (transfer taxes or stamp duty, legal fees, surveys, initial refurbishment) are real capital that only this investment demanded from you, so a net yield that ignores them overstates the return on your money.
The practical way to use the option is to run the tool twice: once with purchase costs blank for the standard figure you can compare against published benchmarks, and once with them entered for the figure that describes your actual deal. The gap between the two runs on the worked example is 6.72% versus 6.51%: small on a cheap purchase, decisive when transfer taxes and refurbishment run into five figures. If you are screening a purchase rather than reviewing a property you already own, the buying a rental property calculator takes the analysis further into deposit, financing and cash flow.
The verdict bands this calculator uses
Every result is graded against the same fixed bands, so a verdict means the same thing on every run. The bands describe typical US rental markets; a yield that reads “below average” in a prime coastal city may be the best the local market offers, which is context the band cannot know.
| Net yield | Verdict shown | What it usually means |
|---|---|---|
| 8% and above | Exceptional | Well above typical market yields; check the risk that comes with it. |
| 6% to under 8% | Strong | A solid yield for most markets; the worked example lands here. |
| 4% to under 6% | Typical | In the normal range for established markets. |
| Above 0% to under 4% | Below average | The property may be overpriced or under-rented. |
| 0% or below | Negative | Costs and vacancy meet or exceed income; the investment loses money on a cash-flow basis. |
What competing calculators miss
The rental-yield field is crowded, and most tools do one part of this job well while skipping the rest:
- Landlord Studio’s rental yield calculator: the closest rival, with vacancy, running costs and purchase costs, plus a mortgage module for cash-on-cash return. Its gaps for a US reader: it is a UK buy-to-let tool (stamp duty framing, deposit conventions), and it does not print the substituted formula line that lets you audit the arithmetic.
- Property Investments UK: a clean gross and net walkthrough with honest formulas, but its net formula divides by the property price with no purchase-cost option and there is no vacancy input at all, so its “net” is rent minus running costs on a property that is never empty.
- YieldAfter: strong on voids, agent fees and the after-tax view for UK landlords, and admirably blunt that gross yield is a sales figure. The gap: UK tax sections dominate the page, and there is no purchase-cost denominator option for the net yield itself.
- Regional guides (Loan Market AU, Avenir Developments, the epsomtax.com guide): good formula teaching, including the net-yield-on-total-cost definition this page follows, but each is written for its own market’s taxes and terms, and the worked examples are fixed illustrations rather than a tool that prints your own substituted formula under the result.
- The gap this page fills: monthly or annual income on one page, vacancy and purchase costs as separate auditable inputs, the net denominator on total cash committed while the gross denominator stays on value alone (the standard definitions, applied consistently), the gap reported in percentage points, a fixed verdict band set, and the full substituted formula printed under every result.
Frequently asked questions
Subtract annual costs from your effective annual income (after vacancy), then divide by the investment value plus any purchase costs and multiply by 100. With $16,800 of net income on $258,000 of capital, the net yield is 6.51%.
Gross yield = annual income ÷ price × 100, ignoring all costs. Net yield subtracts running costs and vacancy first, so it reflects what you actually keep.
In most US markets, 4-6% net is typical, 6-8% is strong, and 8%+ is exceptional but often signals higher risk. Below 4% net usually means the property is overpriced or under-rented.
Yes. Ignoring vacancy overstates income by 3-10% in most markets. A 5% allowance (about two and a half weeks empty) is a conservative starting point.
Both, depending on the yield. In this calculator the gross yield divides by the property value alone, while the net yield divides by value plus any purchase costs you enter, so the net figure is the yield on the cash you actually committed. Leave purchase costs blank and the net yield also divides by the value alone.
Before tax. Yield is a pre-tax investment metric; your after-tax return depends on your tax situation.
Not automatically. This tool measures the property’s own return; if you want a leveraged return, add your annual mortgage interest to the annual costs field.
Yes. Enter any annual income, annual costs and investment value: the formula works for dividends, business income and other assets too.
Your costs plus vacancy exceed your income. That means the investment loses money every year on a cash-flow basis before any capital growth.
Net yield is the annual income return only. Full ROI adds capital growth (or loss) to that income return over the holding period.
Add This Calculator to Your Website
Embed this calculator on your own site with the code below. Pick a size to preview it live, then copy the code.
Powered by Calculator Zilo
References
- Internal Revenue Service. Tips on Rental Real Estate Income, Deductions and Recordkeeping. Accessed October 22, 2026.
- Internal Revenue Service. Topic No. 414, Rental Income and Expenses. Accessed October 22, 2026.
- Internal Revenue Service. Publication 527, Residential Rental Property. Accessed October 22, 2026.
- Internal Revenue Service. Publication 946, How to Depreciate Property. Accessed October 22, 2026.
- U.S. Census Bureau. Housing Vacancies and Homeownership (HVS) program page. Accessed October 22, 2026.
- Federal Reserve Bank of St. Louis (FRED). Rental Vacancy Rate for the United States (RRVRUSQ156N). Accessed October 22, 2026.
- U.S. Department of Housing and Urban Development, HUD User. Fair Market Rents dataset documentation. Accessed October 22, 2026.
- U.S. Census Bureau. American Community Survey (ACS) program page. Accessed October 22, 2026.
- Federal Reserve Board. Financial Accounts of the United States, Z.1 release. Accessed October 22, 2026.
- U.S. Bureau of Labor Statistics. CPI Inflation Calculator. Accessed October 22, 2026.