Free rental planning tool
Rental yield calculator
Compare gross rental yield, net operating yield, and cash-on-cash return using explicit assumptions.
How this calculation works
Gross yield divides annual scheduled rent by purchase price. Net operating yield divides annual NOI by purchase price. Cash-on-cash return divides annual cash flow after debt and reserves by the cash you invested. These measures answer different questions.
Assumptions to review
Purchase price excludes acquisition costs in this simple comparison. Add those costs to your price input if you want an all-in-cost yield. Returns do not include appreciation, sale costs, or tax effects.
Compare rental yields on a consistent basis
Prepare monthly inputs and separate the costs. Use scheduled monthly rent, a vacancy allowance and other monthly income. Convert annual operating bills to monthly amounts before entering expenses. Keep mortgage payments and capital reserves in their own fields. Record the date and evidence behind the rent, expenses, purchase price and cash invested so you can revisit the comparison.
Trace the different denominators. At $2,000 monthly rent and a $250,000 purchase price, gross yield is 9.60%. With 5% vacancy, no other income and $600 monthly operating expenses, net operating yield is 6.24%. Subtracting $900 debt payments and $100 reserves leaves $3,600 annual cash flow; against $60,000 cash invested, cash-on-cash return is 6.00%. These illustrative percentages describe different parts of the same scenario.
Compare like with like. If you add acquisition costs to the purchase-price input, record that you are using a cost-based yield and apply the same basis to each property. Enter cash invested separately and consistently, including the relevant acquisition cash. A larger loan can change cash-on-cash return without changing operating yield. Test higher vacancy and expenses; none of these ratios includes a complete sale, appreciation or tax outcome, or establishes whether a purchase is suitable.