Rental Yield Calculator
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What is Rental Yield?
Rental yield is the return an investor is likely to receive on a property through rent.
It is the rate or the percentage of returns from the rental income.
Ideally, 7% or more is considered as a good rental yield.
Vacancy Rate Table:
Vacant Month | Vacancy Rate |
1 | 0.083 |
2 | 0.166 |
3 | 0.25 |
4 | 0.33 |
5 | 0.416 |
6 | 0.5 |
7 | 0.583 |
8 | 0.66 |
9 | 0.75 |
10 | 0.833 |
11 | 0.916 |
12 | 1 |
Rental Yield Formula:
There are two values to be calculated in Rental Yield.
- Gross rental yield = annual rental income/ property value x 100
- Net rental yield = [Annual rental income* (1 – Vacancy Rate)] – Annual maintenance / Total property cost x 100
Example:
If the Property value is $450000 which receives annual rent of $21,000 and has an annual maintenance of $1000. What is the Gross rental yield ?
Gross rental yield = annual rental income/ property value x 100
Here,
Gross rental yield = $21,000/ $450000 x 100 = 4.667%
Gross rental yield would be 4.667%
If the Property value is $450000 which receives annual rent of $21,000 and has an annual maintenance of $1000 and is vacant for one month in a year. What is the Net rental yield ?
Here, Vacancy rate = number of vacant months / 12 = 1/12 = 0.0833
Net rental yield = [Annual rental income x (1 – Vacancy Rate)] – Annual maintenance / Total property cost x 100
Net rental yield = $21,000 x (1 -0.0833) – $1000 / $450000 x 100 = 4.0557%
Net rental yield would be 4.0557%