What is a good rental yield?

A gross yield of 5-8% is generally considered good across most markets. Net yield of 3-5% after all expenses is more realistic once mortgage, management, maintenance, insurance, and vacancy are accounted for.

What is cash-on-cash return?

Cash-on-cash return measures annual cash flow divided by the cash invested (your down payment and closing costs). It shows the actual cash yield on money you put in, making it the most useful return metric for leveraged property investment.

What is net operating income (NOI)?

NOI is gross rental income minus all operating expenses (management, maintenance, insurance, property tax) but before mortgage payments. It is used to calculate cap rate and is the core measure of property income performance.

What is the cap rate?

Cap rate (capitalisation rate) is NOI divided by property value. It shows the return as if you owned the property outright with no mortgage. It is the standard metric for comparing properties independently of financing structure.

What costs does this calculator not include?

This calculator does not include income tax on rental profits, stamp duty or transfer taxes at purchase, legal and conveyancing fees, capital gains tax on sale, or setup costs such as furnishings. These can significantly affect overall returns.

Loans & Property

Rental Property Calculator

Calculate gross yield, net yield, cash-on-cash return, and annual cash flow on a rental property investment. Covers US, UK, Australia, and Canada.

Country

Property Purchase Price

Down Payment (%)

Mortgage Interest Rate (%)

Mortgage Term (Years)

Monthly Rental Income

Vacancy Rate (%)

Annual Expenses

Property Management Fee (% of rent)

Maintenance and Repairs (% of value)

Annual Insurance

Annual Property Tax

Annual Appreciation (%)

Annual Cash Flow

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You are paying to own this property

Net Yield

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Cash-on-Cash Return

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Full Breakdown

Note: This calculator does not include income tax on rental profits, stamp duty or transfer tax at purchase, legal fees, or capital gains tax on sale. These can significantly affect overall returns. Always consult a qualified accountant or financial adviser.

How It Works

Gross vs Net Yield

Gross yield is annual rent divided by property value — a quick comparison metric. Net yield deducts all operating expenses (excluding mortgage) and gives a truer picture of income performance.

Net Operating Income

NOI is gross rent minus vacancy loss, management, maintenance, insurance, and property tax. It is calculated before mortgage payments, making it comparable across different financing structures.

Cash-on-Cash Return

Cash-on-cash divides annual cash flow (after mortgage) by the cash you put in (down payment). It is the most practical return measure for leveraged investment — how much cash your cash earns each year.

Total Return

Total return combines cash flow and estimated capital appreciation. Because appreciation is uncertain, treat the cash flow figures as your base case and appreciation as a potential bonus — not a guarantee.

Frequently Asked Questions

Gross rental yield of 6-8% is generally considered good. Net yield of 4-6% after expenses is more realistic. Cash-on-cash return of 6-10%+ on leveraged investment is a common target. Markets vary enormously — Sun Belt cities and Midwest markets often offer better yields than coastal cities.

Net rental income (rent minus deductible expenses) is taxed as ordinary income. Deductible expenses include mortgage interest, property tax, insurance, management fees, maintenance, and depreciation (27.5 years for residential property). Passive activity loss rules limit deduction of losses against other income.

The IRS allows residential rental property to be depreciated over 27.5 years (the structure value, not land). This creates a non-cash deduction that reduces taxable rental income significantly, often creating a paper loss even when cash flow is positive. Depreciation is recaptured at 25% when you sell.

A 1031 exchange allows deferral of capital gains tax when selling a rental property, provided you reinvest proceeds into a like-kind property within specific timeframes (45 days to identify, 180 days to close). It is a popular strategy for building a portfolio while deferring taxes indefinitely.

An LLC provides liability protection separating personal assets from rental property claims, but does not eliminate the need for landlord insurance. Single-member LLC income still passes through to personal return. Some lenders charge higher rates for LLC-owned properties. Consult a real estate attorney.

Gross yields of 5-8% are generally targeted. Net yields of 3-5% after mortgage, management, and maintenance are more realistic. Northern cities (Manchester, Leeds, Sheffield) typically offer better yields than London. Always calculate on net yield, not gross.

Rental profit (income minus allowable expenses) is taxed at income tax rates (20% basic, 40% higher rate). Mortgage interest relief is now restricted to a 20% tax credit (Section 24 changes since 2020). This has significantly increased the tax burden for higher-rate taxpayer landlords.

Since April 2020, landlords cannot deduct mortgage interest as a business expense. Instead, a 20% tax credit applies on mortgage interest. For higher-rate taxpayers this means paying 40% tax on rental income from which only 20% is credited — effectively taxed on turnover not profit in some cases.

An additional dwelling supplement applies: an extra 3% SDLT surcharge on all buy-to-let and second home purchases on top of standard rates. For a £280,000 property this adds approximately £8,400 to the purchase cost. Factor this into your yield calculations.

A limited company can deduct full mortgage interest (no Section 24 restriction), paying corporation tax (25%) on profits instead. However, extracting money as salary or dividends creates further tax. Companies face higher mortgage rates and more limited product choice. Worthwhile mainly for higher-rate taxpayers with multiple properties or those building a portfolio.

Gross yields of 3-5% in major cities (Sydney, Melbourne) and 5-7% in regional areas and Brisbane are typical. Net yields of 2-4% after all costs are common. Australian investors have historically relied more on capital growth than yield — total return including appreciation matters most.

When rental expenses (including mortgage interest) exceed rental income, the loss can be offset against other income (such as wages), reducing taxable income. This tax benefit has historically encouraged property investment. The strategy only makes financial sense if capital growth exceeds the ongoing cash shortfall.

Net rental income (rent minus deductible expenses including mortgage interest, management fees, maintenance, depreciation) is added to taxable income and taxed at marginal rates. Property investors can also claim capital works deduction (building depreciation at 2.5% per year) and plant and equipment depreciation.

If you hold an investment property for more than 12 months before selling, only 50% of the capital gain is included in taxable income. This makes long-term property investment significantly more tax-efficient than short-term trading. The discount does not apply to properties owned by companies.

An annual state-based tax on the unimproved land value of investment properties (your principal residence is exempt in most states). Rates and thresholds vary by state. In NSW and Victoria, land tax applies once total investment land value exceeds the relevant threshold. Factor land tax into yield calculations for multi-property portfolios.

Gross yields of 4-6% in major cities (Toronto, Vancouver) and 5-8% in smaller markets are typical. Net yields of 2-4% after expenses and mortgage are common. Like Australia, Canadian investors have historically relied on capital appreciation rather than strong cash yields in major markets.

Net rental income (rent minus deductible expenses: mortgage interest, property management, insurance, repairs, property tax, CCA) is added to taxable income and taxed at combined federal and provincial marginal rates. Losses from rental properties can generally be deducted against other income.

CCA is the Canadian equivalent of depreciation, allowing landlords to deduct a percentage of the building value (not land) each year. Residential buildings are Class 1 (4% declining balance) or Class 6 (10% for certain wood-frame buildings). CCA cannot create or increase a rental loss. Recaptured CCA is taxed on sale.

A corporation allows income splitting and retention at lower corporate rates. However, extracting profits as salary or dividends creates additional tax. Mortgage financing through a corporation is more limited. For most investors with one or two properties, personal ownership is simpler and cheaper. Consult a tax accountant.

Canada banned most non-resident foreign buyers from purchasing residential property (Prohibition on the Purchase of Residential Property by Non-Canadians Act, extended to January 2027). Exceptions exist for work permit holders, international students, and certain commercial purchases. Canadian residents and citizens are not affected.

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Rental Property Calculator

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