7.4%
United States
Rental property yield calculator — gross yield vs cap rate
Gross yield is the listing. Cap rate is the property. Cash after tax is yours.
Gross yield — annual rent divided by price — is the quickest way to screen a rental. Cap rate is the better one: net operating income (rent after vacancy, management and operating expenses) divided by price. This calculator shows both, then points you to the after-tax cash flow, which is what actually lands in your account once the mortgage and the IRS have had their share.
Net yield 3.9%, not the 7.4% on the listing
Voids, management and running costs take $12,978 a year before any mortgage or tax.
3.9%
$14,622
| Year 1 | Amount |
|---|---|
| Rent (full year) | $27,600 |
| Less voids / vacancy | -$1,380 |
| Less management | -$2,098 |
| Less running costs | -$9,500 |
| Net operating income | $14,622 |
Worked example
A $375,000 single-family rental renting for $2,300 a month ($27,600 a year) has a gross yield of 7.4%.
Allow 5% for vacancy and collected rent falls to $26,220. A 8% property manager costs $2,098. Property tax, insurance, maintenance and other operating expenses of $9,500 come next. Net operating income (NOI) is $14,622, so the cap rate is 3.9%.
Neither figure includes debt service or income tax. To see those, use the cash-on-cash calculator and the rental tax calculator.
Gross yield, cap rate and NOI
Gross yield = annual scheduled rent ÷ price. It ignores all costs.
Net operating income = rent collected − property management − operating expenses. NOI excludes mortgage payments, depreciation and income tax by convention, which makes it comparable across buyers with different financing.
Cap rate = NOI ÷ price (or current value). It is the unlevered return — what an all-cash buyer earns before income tax. When your mortgage rate is above the cap rate, leverage lowers your return rather than raising it.
Checking the operating expenses
- Property tax is often the largest line item and is reassessed on sale in many states — use the post-purchase figure, not the seller's.
- Insurance for a rental (a landlord or dwelling fire policy) usually costs more than a homeowner policy.
- Maintenance and capital expenditure: roofs, HVAC and water heaters wear out on a schedule; budget for them every year.
- HOA dues and utilities you pay as the owner.
What this calculator does not include
Cap rate and gross yield exclude financing, closing costs, income tax, depreciation, appreciation and selling costs by definition. All of these are in the cash flow calculator.
Questions landlords ask
Is cap rate the same as net yield?
Yes in practice: both are net operating income divided by price. Cap rate is the US term.
Does cap rate include the mortgage?
No. Cap rate is unlevered. Cash-on-cash return is the levered measure that includes your mortgage payments.
What vacancy rate should I use?
There is no universal figure; the default here is 5%. Use local rental data or your own history, and test a higher figure to see how sensitive the deal is.
Is property tax an operating expense?
Yes. It is included in NOI and is deductible on Schedule E.
Tax rules: US registry v1.0.0, last reviewed 2026-09-30. Figures in the text use the default inputs above. Sources and method.