Rental Yield Calculator

Key Metrics Explained

• Gross Yield: Annual rent / Purchase price (ignores expenses)
• Cap Rate: NOI / Property value (return if paid all cash)
• Cash-on-Cash: Annual cash flow / Cash invested (your actual return)
• NOI: Net Operating Income = Income - Operating Expenses (before mortgage)

The 1% Rule

A quick screening tool: monthly rent should be at least 1% of purchase price. A $300,000 property should rent for at least $3,000/month to likely cash flow positively.

Typical Benchmarks

• Cash-on-Cash: 8-12% considered good
• Cap Rate: 5-10% depending on market
• Gross Yield: 8-12% for cash flow properties

Hidden Costs to Consider

• Capital expenditures (roof, HVAC, appliances)
• Tenant turnover costs
• Legal and eviction costs
• HOA fees (if applicable)
• Utilities not passed to tenant

Sources of Return

• Cash Flow: Monthly income after all expenses
• Appreciation: Property value increase over time
• Principal Paydown: Tenant pays down your mortgage
• Tax Benefits: Depreciation, interest deduction

Due Diligence Checklist

• Verify actual rent comparables in area
• Inspect property thoroughly
• Review actual expenses from seller
• Research neighborhood and trends
• Factor in property management time/cost
• Plan for worst-case scenarios