Rental Yield Calculator
Gross, net and after-tax yield on a let property, and what is actually left each month once the loan is paid.
Runs entirely in your browser. Nothing is uploaded, logged or stored.
Net yield (%)
3.30
- Gross yield (%)
- 4.44
- Net yield after tax (%)
- 3.30
- Cash flow, per month
- -418.25
- Cash flow, per year
- -5,019.03
- Return on the cash put in (%)
- -7.17
- Occupancy needed to break even, before tax (%)
- 136.83
- Total invested
- 270,000.00
- Cash put in
- 70,000.00
- Loan payment, per month
- 1,159.92
- Years of rent the purchase is worth
- 22.50
Where the rent goes
| Rent charged over a year | 12,000.00 |
|---|---|
| Less the months with no rent | -600.00 |
| Less the running costs | -2,500.00 |
| Less tax | -0.00 |
| Less the loan | -13,919.03 |
| Left over the year | -5,019.03 |
Four numbers are all called "the yield" and they answer four different questions. Gross yield is the rent over what the purchase cost, which is the figure in the listing and the one nobody can spend. Net yield takes off the vacancy and the cost of holding the property. After tax takes off the tax. Cash flow takes off the loan as well, and is the only one of the four that describes a bank account.
All four are computed here from the same inputs, so the gap between them is visible rather than argued about.
How it works
What was invested is the price plus the acquisition costs plus the works. Everything is divided by that figure rather than by the price alone, because the money spent on duties and on a new kitchen was spent all the same.
Rent collected is the rent charged less the vacancy share, and the running costs come off that. Tax is applied at the rate you give to what is left, before the loan. The loan payment is then subtracted to give the cash flow: it is not part of any yield, because it describes how the purchase was paid for rather than what the property earns.
Return on the cash put in divides the cash flow by what you actually put in — the total invested less the amount borrowed. Borrow the whole thing and there is no such figure, so the row is absent rather than infinite.
Examples
| Case | Input | Result |
|---|---|---|
| A flat bought with a loan | 250,000 price, 20,000 costs, 1,000 rent a month, 5% vacancy, 2,500 a year of costs, 200,000 borrowed over 20 years at 3.5% | Gross yield 4.44%, net yield 3.30%, and a cash flow of about -418 a month: the rent is nowhere near covering the loan, and it would take 137% occupancy to break even, which is to say it cannot. |
| The same flat bought outright | The same purchase with nothing borrowed | The yields do not move at all, and the cash flow turns to about +742 a month. A yield is a property of the asset; a cash flow is a property of how it was financed. |
Frequently asked questions
Why does the loan not change the yield?
Because the yield measures what the property earns, and borrowing is a decision about how to pay for it rather than a feature of it. Two identical flats, one financed and one not, have the same yield and very different cash flows — which is exactly what the two figures are for.
Why do I have to type the tax rate myself?
Because how rent is taxed is a country's rule and often a choice between several regimes within it, each with its own deductions, allowances and thresholds, all of which move from one year to the next. A rate invented here would be wrong for nearly everyone while looking like a computed result. The rate you enter is applied to a base the page states, so you can see what it was applied to.
Is the tax applied before or after the loan interest?
Before. The base used here is rent collected less running costs, with no financing in it. If your regime lets you deduct loan interest, the effective rate on that base is lower than the headline rate, and entering the headline rate will understate the result.
Does a negative cash flow mean it is a bad purchase?
Not on its own. It means the rent does not cover the loan, so the purchase is being funded partly out of income — which may be exactly the plan, since the instalments are also building equity. It does mean the shortfall has to be affordable every month, including the months with no tenant in them.
What is the occupancy needed to break even?
The share of the year that has to be let for the rent to cover the running costs and the loan, before tax. Above 100% it cannot be reached at all: the property does not pay for itself even fully let.
Good to know
- Amounts carry no currency: the answer is in whatever you put in.
- Results use double precision floating point arithmetic. That is exact enough to decide with and is not an accounting record.
- Nothing here is indexed: the rent, the costs and the tax rate are held at what you entered. This is the picture of one year, not a projection across twenty.
- Capital gain is not counted. A yield measures income, and what a property will be worth later is not something this tool is in a position to assert.
- No jurisdiction is assumed anywhere: duties, property tax, insurance and the rate on rental income are all fields, because each of them varies by country, by region and by year.