Rental Yield Calculator
Work out a property's rental yield and cash flow after costs, plus cap rate and five-year profit, with your mortgage, vacancy and transaction costs included. The numbers update as you move the sliders.
- Assess the yield
- Compare scenarios
- Make an informed decision
Set up your investment
1. Property and rent
Share of the year the property stands empty
2. Costs
Maintenance, service charge, owner's utilities, minor repairs
3. Property price growth
Calculation results
Net cash flow
€1,130 / mo
€13,560 / yr
- Gross yield
- 6%
- Cap rate
- 4.5%
- Cash-on-cash
- 4.3%
- Price growth
- 3%
5-year forecast
Investment profile
How we calculate- Yield
- Medium
- Cap rate 4.5%
- Cash flow
- Positive
- €1,130 a month
- Safety margin
- High
- breaks even from 17% occupancy
- Reliance on price growth
- Medium
- 40% of the return comes from price growth
Key figures (year 1)
- Gross rental income
- €18,000
- Vacancy loss
- -€1,440
- Operating costs
- -€3,000
- Net operating income
- €13,560
- Rental income tax
- €0
Net cash flow
€13,560
€1,130 / mo
Result after 5 years
- Property value
- €347,782
- Selling costs
- -€10,433
- Cash flow over 5 years
- +€70,567
- Cash invested
- -€315,000
Total profit
€92,916
5-year ROI: 29.5% · 5.7% a year on average
Break-even point
- Minimum occupancy
- 17%
- Minimum rent
- €272 / mo
Not included in the calculation
- Exchange rate swings
- Mortgage rate changes
- Major repairs beyond normal upkeep
- Capital gains tax on sale
- Taxes in your country of residence
- Furniture and getting the property ready to let
A manager will check the numbers for a specific country and pick properties within your budget
How we calculate
The calculator only uses the figures you enter. It doesn't pull in market data, so the result is only as accurate as your rent and cost estimates. Cash flow, yield and the break-even point are first-year figures; the forecast covers five years.
Cash flow
We take a year's rent and subtract vacancy. From what's left we subtract running costs, property tax, insurance and the property manager's fee: that's net operating income (NOI). Then we take off rental income tax (charged on NOI, and only when it's positive) and a year of mortgage payments. What remains is the annual cash flow. Divide it by 12 for the monthly figure.
Yield
Gross yield is a year's rent divided by the price, before vacancy and costs. Cap rate is NOI divided by the price. The mortgage doesn't affect it, which makes it a fair way to compare properties. Cash-on-cash is cash flow divided by your cash invested: the down payment plus purchase costs. For a cash purchase, the down payment is the full price.
Result after 5 years
The property value grows with the scenario you pick, while rent and costs rise by the yearly rate you set. After five years we work out your equity after a sale: the value minus selling costs and the mortgage balance. Add five years of cash flow, subtract your cash invested, and you have the total profit. Five-year ROI is that profit divided by your cash invested.
Average annual return (IRR)
Five-year ROI ignores when the money arrives; IRR doesn't. It's the yearly rate at which your cash invested, each year's cash flow and your equity after the sale balance out. The calculator looks for that rate between −99% and +100% a year. If there isn't one in that range, for example when money only goes out, it shows that there is no average annual return.
Break-even point
Minimum occupancy is the share of the year the property has to be let for cash flow to reach zero. Minimum rent is the monthly rent that brings cash flow to zero at your vacancy rate. If cash flow stays negative even when the property is let all year, the calculator tells you.
Investment profile
This is the calculator's own scale, not a market rating or advice. Yield is high from a 6% cap rate, medium from 4% to 6% and low below 4%. Cash flow counts as around zero when it's within 2% of annual rent either way. The safety margin is high when the property breaks even below 70% occupancy and low when it needs more than 90%. For reliance on price growth, we add five years of price growth to five years of cash flow and look at price growth's share: under 30% is low, over 60% is high.
Frequently asked questions
What's the difference between cap rate and gross yield?
Cap rate takes vacancy and costs into account; gross yield doesn't. Gross yield is a year's rent divided by the price. Cap rate is net operating income divided by the price, where NOI is rent minus vacancy, running costs, property tax, insurance and management. So cap rate is never higher than gross yield, and the gap between them is your vacancy and costs.
How does the calculator handle a mortgage?
As an annuity: the same payment every month for the whole term. A year of payments comes out of cash flow, and the mortgage balance after five years comes out of the sale value. You set the down payment and rate in the Mortgage block and the term in advanced settings. Future rate changes aren't modelled.
Why is the total profit higher than the price growth?
Because it also includes five years of cash flow. Total profit is your equity after the sale (value minus selling costs and the mortgage balance) plus cumulative cash flow, minus your cash invested. Purchase and selling costs reduce it. So does negative cash flow, which can push the profit below the price growth.
What is IRR, and why use it alongside ROI?
IRR is the average annual return, taking into account when the money comes in. Two properties with the same five-year ROI can have different IRRs: if one pays rent from the first year and the other makes all its gain at the sale, the first has the higher IRR. Because IRR is a yearly rate, you can compare it directly with the annual rate on a deposit or bonds.
Does the calculator include taxes for a specific country?
No. Purchase, ownership and rental taxes vary a lot between countries and depend on your tax status, so the calculator doesn't fill in any country's rates. In advanced settings, property tax (a yearly amount) and rental income tax are 0 by default, and purchase costs are set to a general 5% of the price. Replace them with the figures for your case. Capital gains tax on the sale and taxes in your country of residence aren't included. Our country guides give a starting point; check the exact figures with a tax adviser.
What counts as a good rental yield?
There's no single benchmark: it depends on the country, the type of property and the mortgage rate. On the calculator's scale, a cap rate from 6% is marked high and 4% to 6% medium. Compare the result with your alternative. If a deposit in your currency pays more than the property's cash-on-cash return, you're betting on price growth rather than rent.
