Gross yield is the number in the estate agent’s window; net yield is the number that reaches your bank account. The distance between them is vacancy, property tax, insurance, maintenance and management — costs that routinely take a quarter off the headline figure. This net rental yield calculator puts both numbers side by side: your rent and costs go in, and out come the gross yield, the net yield, the annual cashflow and its monthly equivalent, all against your total investment including purchase costs. Every figure is an estimate built from your inputs — a screening tool for comparing properties, not financial advice.
The worked example — watch the yield shrink honestly
Property price 200,000, no purchase costs added, rent 1,200 a month. Gross income is 14,400 a year, so the gross yield is 7.2% — the window number. Now the reality lines: vacancy at 5% (roughly two to three empty weeks a year, every year, averaged) cuts the collected rent to 13,680. Costs: property tax 1,200, insurance 600, maintenance 1,000 — 2,800 in total. Net income: 13,680 − 2,800 = 10,880, a net yield of 5.44% and a cashflow of 906.67 a month. Add an 8% management fee and net income falls again to 9,785.60 (net yield 4.89%). Nothing about the property changed — only the honesty of the arithmetic. That is the entire argument for screening on net yield.
What belongs in each line
Vacancy is a percentage of the year’s rent: 5% ≈ 18 days empty, 8% ≈ a month. Use your market’s real average, not the seller’s tenancy history. Maintenance is not the boiler repair in year three; it is the long-run average of everything — a common planning allowance is 0.5–1% of the property’s value per year, more for older stock. Purchase costs (taxes, legal, fees) belong in the investment: enter them as a percentage of price and the denominator grows to what you actually spent, which is the only yield base that means anything. Mortgage payments are deliberately excluded — yield measures the asset, not your loan; cashflow after debt is a different, also useful, number that depends on your financing.
Comparing two properties
Run both through with the same assumptions discipline — same vacancy method, same maintenance rule — and the comparison becomes fair even if both estimates are rough. The classic trap is the cheap property with the higher gross yield whose net yield collapses under older-building maintenance and longer vacancy. Net yield will not spot a bad area or a structural problem, but it stops the spreadsheet from lying about the part it can see.
Honest limits
This is an estimator, not a valuation and not advice: it holds rent and costs flat, ignores tax on your rental income (which depends on your jurisdiction and circumstances), ignores capital growth or loss, and knows nothing about the property itself. Rents, costs and rules change; verify the figures that matter with local sources and a professional before committing money. Used as intended — a fast, honest first screen — it will kill more bad deals in ten minutes than a month of viewings.
The two mistakes this calculator exists to prevent
The first is comparing a gross yield on one property with a net yield on another — listings, portals and even some agents quote whichever figure flatters the property, and a 7% gross next to a rival’s honest 6% net looks like a win until the costs land. Always screen on the same basis, and net is the only basis that survives contact with a bank statement. The second mistake is a vacancy rate of zero, the default in almost every seller’s spreadsheet: no property lets continuously forever, and even a two-week gap each year is a 4% vacancy that the gross figure never shows. If a deal only works at 0% vacancy and 0 maintenance, it does not work — it merely has not met a boiler, a gap between tenants or a repaint yet. Put realistic numbers in, and let the properties that still clear your threshold introduce themselves.
Related tools
Versión en español: Calculadora de Rentabilidad del Alquiler Bruto y Neto de una Vivienda: con Todos los Gastos · Mortgage Affordability (Borrowing Cap) Calculator · Cap Rate Calculator (in Spanish).
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