Real estate & rental
Rental Yield Calculator
Yield on a rental property, with the leveraged return shown alongside the unleveraged one.
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. This uses interest only, not full amortisation, so it measures the income return rather than total cash flow. Principal repayment is not a cost, it is a transfer into equity, but it still leaves the bank account each month.
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About this calculator
Why is the leveraged return higher?
Because you are earning the property's return on money you borrowed. It magnifies the result in both directions: when the yield falls below the mortgage rate, leverage works against you.
Is interest-only the right way to look at it?
For measuring return, largely yes, since principal becomes equity rather than disappearing. For cash flow it is not, because the full payment still leaves your account.
The formula
net yield = net income / price; leveraged return = (net income - interest) / deposit
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