How to read this result
In the default example, gross rental yield is 8.00%. Results describe this input scenario; they are not a recommendation.
Change one assumption at a time to see how it affects the scenario. Compare periods and cost definitions consistently. Negative results show a modeled shortfall; an unavailable ratio needs a valid denominator.
Formula and methodology
Gross yield is annual rent divided by property cost. The simple net yield deducts the annual property expenses entered before dividing by the same cost. Both are expressed as annual percentages.
Enter percentages as whole numbers: 5 means 5%. When used as a factor, the calculation divides a percentage by 100. Percentage outputs multiply the final ratio by 100. Calculations retain precision internally; displayed amounts and rates are rounded to two decimals.
Variables and input definitions
- Annual rent (USD/year)
- Scheduled annual rent. Minimum: 0.
- Property cost or value (USD)
- Acquisition cost or current property value, selected and labeled by user. Minimum: 0.
- Annual property expenses (USD/year)
- Expenses used for simple net yield; debt service excluded. Minimum: 0.
Worked example
This example uses the exact prefilled inputs above. Reset defaults to restore this scenario after making changes.
| Item | Default scenario |
|---|---|
| Annual rent | $36,000.00 |
| Property cost or value | $450,000.00 |
| Annual property expenses | $10,000.00 |
| Item | Default scenario |
|---|---|
| Gross rental yield | 8.00% |
| Simple net rental yield | 5.78% |
Assumptions and limitations
Net-yield conventions vary. Clearly label which expenses are included and exclude financing unless a distinct leveraged return output is shown.
Results describe this input scenario; they are not a recommendation.
The tool uses values you supply. It does not retrieve market prices, verify leases or inspect a property. Results exclude items outside the listed inputs. Review local requirements and the relevant contract when a payment, fee or allocation depends on them.
Common mistakes
The simple net measure does not automatically include financing, vacancy, major replacements or exit proceeds. Include the relevant costs in the expense estimate and clearly distinguish this metric from equity return.
Sources and method references
These references provide context for the method and terminology. They do not endorse this tool or validate your property assumptions.
- IRS — Publication 527 (2025), Residential Rental PropertyRental income and expense concepts; operating/rental expense context.
- Office of the Comptroller of the Currency — Comptroller's Handbook — Commercial Real Estate LendingNOI, direct capitalization, cap-rate valuation and DCF concepts for commercial real estate.
Frequently asked questions
Why does net rental yield fall below gross yield?
Net yield subtracts entered property expenses. Gross yield compares rent with cost without deducting those expenses.
Is the net yield here cash-on-cash?
No. Both yield measures use property cost as the denominator. Cash-on-cash instead uses invested cash and annual cash flow after financing.