Real estate & rental
Real Estate Rental Yield Calculator
Gross and net rental yield, and the gap between them that expenses create.
Result
An arithmetic tool, not investment advice. Property returns depend on the local market, the condition of the building, financing terms and tax position, none of which a calculator can see. Verify the income and expense figures against actual statements rather than a seller's projection. Vacancy, repairs and capital expenditure are the three line items most often left out of a listing's numbers, and together they routinely account for 20% to 30% of gross rent. A pro forma that omits them is a marketing document, not an analysis. Yield on total cost, which includes purchase costs, is the honest denominator for judging a new acquisition, because that is the money actually committed.
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About this calculator
Why is gross yield quoted so often?
Because it is flattering and easy. It requires no expense data and is always the larger number, which is why marketing material prefers it.
What should the gap be?
Typically 30% to 45% of gross, more where the landlord pays utilities or the building is old. A quoted net yield within a point of gross usually means expenses were not counted properly.
The formula
gross yield = annual rent / value; net yield = (effective rent - expenses) / value
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