Faro Labs / Tools / Rental yield calculator
Rental yield calculator
Gross yield sells the deal; net yield is the one you live with. See both from the same inputs, with every expense that separates them shown.
Gross yield vs net yield
Gross yield is the number in listing blurbs because it's flattering and takes one division. It answers "what fraction of the price does this property collect in rent each year" and nothing else: no vacancy, no taxes, no roof. It's a legitimate screening tool for sorting a long list, and a bad basis for a decision.
The gap is the whole story
Net yield subtracts what it actually costs to operate the property and divides by what it actually cost to acquire it. On a typical single-family rental the two land two to four points apart; when the gap is wider than that, something in the expense column, taxes, insurance, an HOA, is doing more damage than usual and deserves a second look.
Yield and cap rate
Net yield and cap rate are close cousins: both divide net operating income by a value. Cap rate conventionally uses the property's price or market value alone, while net yield here uses your total invested capital including purchase costs, which is the honest denominator when you're the one writing the checks.
Rental yield questions
What is a good rental yield?
It depends entirely on the market. Gross yields of 8 to 10 percent are common in cheaper Midwest and Southeast cash-flow markets, while 3 to 4 percent is normal in expensive coastal cities where the return is expected to come from appreciation instead. Compare a yield to its own market, never to a national average.
Should yield include the mortgage?
No. Yield is a property-level measure: it describes the asset, not your financing, so two buyers with different loans get the same yield on the same building. Once you add debt you're measuring cash-on-cash return instead, which is the right number for what your own money earns.
Why is my net yield so much lower than gross?
Because operating a rental costs real money: taxes, insurance, maintenance, management, and the weeks the unit sits empty between tenants. Across a full year those routinely consume 35 to 50 percent of collected rent. A gross yield that looks excellent and a net yield that looks ordinary is the normal, honest result.
Every calculator
Stop guessing the expense column.
Faro fills taxes, insurance, and market rent from real data for a specific address, then shows the yield that survives them.
Estimates for analysis and educational use only: not financial, investment, tax, or legal advice. Verify every number independently before making a purchase decision.