# What Is Rental Yield and How to Calculate It Before You Buy > Rental yield is the annual rent as a percentage of the property price. Here is gross vs net yield, the cash-on-cash return, and a free calculator that does the math. URL: https://uttir.com/blog/what-is-rental-yield-and-how-to-calculate-it-before-you-buy Published: 2026-08-24 Author: Uttir Reading time: 3 min Tags: rent, real-estate, investing, yield, calculators, what-is ## Quick answer **Rental yield** is the annual rent you collect, expressed as a percentage of the property’s value. **Gross yield** uses the purchase price; **net yield** subtracts all running costs; **cash-on-cash return** uses only the cash you put in, not the loan. Use the [Uttir Rental Yield Calculator](/rental-yield-calculator) to run all three in one pass. If you are looking at a buy-to-let property, the listing price and the headline rent only tell you half the story. The number that decides whether a deal is worth doing is the *rental yield* — annual rent as a percentage of the price you pay. This post walks through what rental yield actually is, the three versions every landlord should know (gross, net, and cash-on-cash), and the rules of thumb that separate a good investment from a bad one in the current market. ## The three versions of rental yield ### 1. Gross rental yield The simplest version. Take 12 months of rent, divide by the purchase price, multiply by 100. ``` Gross yield % = (Annual rent ÷ Purchase price) × 100 ``` Worked example: a $300,000 property that rents for $2,000/month has a gross yield of (24,000 / 300,000) × 100 = **8.0%**. Gross yield is the figure agents put in their listings because it is the largest one. It ignores every cost of running the property. ### 2. Net rental yield Subtract the actual running costs from the rent before dividing. ``` Net yield % = ((Annual rent - Annual costs) ÷ Purchase price) × 100 ``` Annual costs typically include: property management (6-10% of rent), insurance, maintenance reserve (5-10% of rent), vacancy allowance (5-8% of rent), landlord income tax, HOA / body corporate fees, and any utilities the landlord pays. Worked example: $24,000 rent minus $7,000 in costs = $17,000 net. $17,000 / $300,000 = **5.67% net yield**. The 8% headline became a 5.67% real number. ### 3. Cash-on-cash return For a leveraged deal (most buy-to-let purchases), the most honest figure is the return on the *cash you actually put in* — the deposit, closing costs, and renovation — not on the total purchase price. ``` Cash-on-cash return % = (Annual net cashflow ÷ Cash invested) × 100 ``` Annual net cashflow = annual net rent − annual mortgage payments. Worked example: $24,000 rent − $7,000 costs − $14,400 in mortgage payments = $2,600 net cashflow. If you invested $60,000 cash (20% down + closing), that is $2,600 / $60,000 = **4.33% cash-on-cash return**. After mortgage paydown and price appreciation, the total return is higher; the cash-on-cash number captures only the year’s dividend. ## What is a “good” rental yield? It depends on the market and on the cost of money. - **5-7% gross** is typical for stable urban markets in 2026 (US Sunbelt, UK Midlands, German secondary cities). Cap rates are compressed by low interest rates and high demand. - **8-10% gross** is the range for higher-risk markets (small-town US Midwest, parts of the UK North, Spanish interior) or for properties that need significant work. - **10%+ gross** usually means a high-vacancy or distressed-asset scenario; the headline yield is high because the underlying risk is high. For net yield, subtract 2-3 percentage points to account for costs. For cash-on-cash, expect 4-8% in a normal market; above that, check the assumptions. ## Common mistakes that make rental yield look better than it is - **Ignoring vacancy.** A 5% vacancy assumption knocks 5% off gross. Many real-world units sit empty 8-10% of the year between tenants. - **Using the asking rent, not the achieved rent.** The actual rent you will collect is typically 5-10% below the listing. - **Ignoring maintenance.** A 5-7% annual maintenance reserve is realistic. The first 5 years of a new property are cheap; years 8-15 are when the big-ticket items come up (HVAC, roof, water heater, appliances). - **Forgetting income tax.** Rental income is taxable in most jurisdictions. The net is what hits the bank, not the gross. - **Confusing gross and net.** The 8% gross may be 4-5% net. Run both numbers, every time. ## How to run the numbers For a quick check on a single property, the [Uttir Rental Yield Calculator](/rental-yield-calculator) runs all three yields (gross, net, cash-on-cash) in one pass — purchase price, monthly rent, all the costs, down payment, and mortgage rate. Runs in your browser, no signup, no upload. For more complex decisions (compare two properties, model a refinance, plan a portfolio), the [Uttir Mortgage Calculator](/mortgage-calculator) and [Loan Amortization Calculator](/loan-amortization-calculator) cover the financing side, and the [Break-Even Calculator](/break-even-calculator) is the right tool for the “how long until this pays off” question. ## Bottom line Rental yield is the cleanest way to compare two buy-to-let properties on equal terms. Always run gross, net, and cash-on-cash — the spread between them tells you the deal’s true economics. The [Uttir Rental Yield Calculator](/rental-yield-calculator) does all three in one pass, in your browser, with no upload. ## Related tools - [Rental Yield Calculator](https://uttir.com/rental-yield-calculator) — Calculate gross yield, net yield (cap rate), and cash-on-cash return for a rental property. Includes monthly cash flow and time to recoup. - [Rent vs Buy Calculator](https://uttir.com/rent-vs-buy-calculator) — Compare the total cost of renting vs buying a home over a time horizon. Accounts for mortgage, taxes, insurance, maintenance, appreciation, and opportunity cost of the down payment. - [Mortgage Calculator](https://uttir.com/mortgage-calculator) — Estimate monthly mortgage payments, including down payment, property tax, and insurance. - [Loan Amortization Calculator](https://uttir.com/loan-amortization-calculator) — Generate a full month-by-month amortization schedule for any loan. See principal vs interest, total cost, and the full payment table. - [Break-Even Calculator](https://uttir.com/break-even-calculator) — Find out how many units you must sell to cover your costs and start making a profit. - [Percentage Calculator](https://uttir.com/percentage-calculator) — Three percentage tools in one: percent of a value, ratio as a percent, and percent change. --- For the full HTML article, visit https://uttir.com/blog/what-is-rental-yield-and-how-to-calculate-it-before-you-buy. This file is the markdown rendering at https://uttir.com/blog/what-is-rental-yield-and-how-to-calculate-it-before-you-buy.md. See https://uttir.com/llms.txt for a site-wide summary.