RENT

Real Estate

Rental Yield Calculator

Estimate gross and net rental yield from purchase price, acquisition costs, rent, vacancy, and operating expenses. Review annual cash flow, a five-year income projection, cost composition, and professional PDF analysis.

Property price Acquisition costs Monthly rent Vacancy allowance (%) Annual operating expenses Annual rent growth (%) Annual expense growth (%)

Annual scheduled rent$0.00

Net operating income$0.00

Gross rental yield0%

Net rental yield0%

Monthly NOI equivalent$0.00

Operating reconciliation

From scheduled rent to net operating income

Current-year operating waterfallScheduled rent − vacancy − expenses = NOI

Year	Scheduled rent	Vacancy loss	Effective income	Operating expenses	NOI

How to use Rental Yield Calculator

Enter property price and all acquisition costs included in the investment basis.
Enter monthly rent, vacancy allowance, and annual operating expenses.
Add separate rent-growth and expense-growth assumptions.
Read the operating-income composition and five-year NOI projection before comparing properties.

Calculator guide

Understanding Rental Yield Calculator

Rental yield should keep scheduled rent, vacancy loss, operating expenses, acquisition cost, and financing outside the numerator clear. Gross yield is a quick rent-to-price ratio; net yield uses property operating income and the full entered acquisition basis.

Gross is not net Vacancy and operating costs separate the two yields.

Capital basis matters Acquisition costs reduce net yield.

NOI is unlevered Mortgage payments stay outside this measure.

Projection is explicit Rent and expenses grow at separate entered rates.

Calculation method

How the calculation works

Gross yield = annual rent / property price; net yield = annual net operating income / total acquisition cost. Annualize rent, deduct vacancy and operating expenses for NOI, divide scheduled rent by price for gross yield, and divide NOI by price plus acquisition costs for net yield.

Detailed calculation process

Build gross and net rental yield from the operating statement

The default property costs $320,000 plus $16,000 of acquisition costs, rents for $2,400 per month, assumes 5% vacancy, and carries $7,200 of annual operating expenses.

General formula: R = 12rV = vREGI = R-V = R(1-v)NOI = EGI-OY_g = R/PY_n = NOI/(P+A)NOI_y = 12r(1+g_r)^(y-1)(1-v)-O(1+g_o)^(y-1) Monthly rent becomes scheduled annual rent. Vacancy removes an entered share, operating expenses are then deducted, and the resulting NOI is compared with the entered capital basis. The projection grows rent and expenses independently.

What each symbol means

r, R Monthly rent and scheduled annual rent ($/month, $/year).

v, V Vacancy rate (decimal) and modeled annual vacancy loss ($/year).

EGI, O, NOI Effective gross income, operating expenses, and net operating income ($/year).

P, A Property price and acquisition costs ($).

Y_g, Y_n Gross yield and net rental yield (% per year).

g_r, g_o, y Annual rent growth, expense growth (decimals), and projection year.

Worked substitution with the default inputs

1. Annualize scheduled rent R = 12($2,400/month)R = $28,800/year The monthly rent is converted to a yearly amount before any percentage deduction.

2. Apply vacancy v = 5/100 = 0.05V = 0.05($28,800) = $1,440EGI = $28,800-$1,440 = $27,360 Vacancy is applied to scheduled rent, not to property price.

3. Calculate NOI NOI = $27,360-$7,200NOI = $20,160/yearmonthly equivalent = $20,160/12 = $1,680 NOI is before financing, income tax, depreciation, and appreciation.

4. Calculate both yields Y_g = $28,800/$320,000 = 9.000%Y_n = $20,160/($320,000+$16,000) = 6.000% The two yields use different numerators and different entered capital bases.

5. Check the first projected year NOI_1 = $28,800(1.03)^0(0.95)-$7,200(1.025)^0NOI_1 = $20,160 Year one must reconcile exactly with the current NOI before later growth is applied.

The defaults produce $28,800 scheduled rent, $20,160 NOI, 9.00% gross yield, and 6.00% net yield on the $336,000 entered acquisition basis.

Operating composition

See scheduled rent split into vacancy, expenses, and NOI

A stacked operating-income view explains the current net yield while the table extends the same definitions over five years.

Scheduled rent The full annual rent starts the reconciliation.

Vacancy loss The entered vacancy rate removes income.

Operating expenses Property costs are deducted after vacancy.

NOI remainder The residual supports the net-yield calculation.

Worked situations

Practical examples

A $2,400 monthly rent annualizes to $28,800.
Five percent vacancy reduces effective income by $1,440.
After $7,200 of expenses, NOI is $20,160 and net yield is 6.00%.

Better inputs

Useful tips

Use the same expense boundary when comparing properties.
Include recurring property-level costs even when paid irregularly.
Stress-test vacancy and expense growth instead of relying on one yield.

Before relying on the result

Limitations and common mistakes

NOI excludes mortgage payments, income tax, depreciation, appreciation, and sale costs.
Growth rates are deterministic and do not model tenant turnover, repairs, or rent restrictions.
Property value, usable rent, and expenses can differ materially from entered assumptions.

Reference

Key terms

Scheduled rent: Rent if the property were occupied and paid for the full period.
Effective gross income: Scheduled rent after the entered vacancy loss.
NOI: Effective income less property operating expenses, before financing and tax.
Acquisition basis: The entered price plus acquisition costs used in net yield.

Important note

Calculated from the entered property and financing assumptions. It does not replace lender, appraisal, legal, tax, or investment review.

Frequently asked questions

Why is gross yield higher than net yield?

Gross yield ignores vacancy, operating expenses, and acquisition costs.

Should mortgage payments be entered as expenses?

No. NOI and property yield are operating measures before financing.

Why use price plus acquisition costs for net yield?

Those entered costs are capital committed to acquire the property.

Does the projection predict future rent?

No. It applies the entered growth rates consistently for scenario planning.