PROPERTY INVESTMENT CALCULATOR
Calculate the gross and net rental yield of a property and understand how purchase price, rental income and ongoing costs affect the numbers.
Rental yield measures the rental income generated by a property relative to its value or purchase price. Gross yield provides a quick comparison between opportunities, while net yield can give a more realistic picture by accounting for ongoing property costs.
Illustrative example
A property bought for £250,000 and let at £1,300 a month produces £15,600 a year. Gross yield is £15,600 ÷ £250,000 = 6.24%. If management is 10% of rent (£1,560), maintenance is 5% (£780), insurance is £240, service charge is £600 and other costs are £120, annual operating costs are £3,300. Net income is £12,300 and net yield is 4.92%.
What it measures: income relative to purchase price. Gross yield uses rent and price only; net yield deducts the operating costs entered. Mortgage payments, tax, voids, arrears, capital expenditure and future price changes are not included unless you model them elsewhere. Test rent and cost assumptions rather than treating either yield as a forecast.
Gross yield looks at rental income before expenses. Net yield considers relevant operating costs, helping you see a more realistic return.
A strong headline yield does not automatically make a property a strong investment. Finance costs, refurbishment, maintenance, void periods, purchase costs and the amount of cash invested can materially change the overall return.