Gross Yield is simply your annual rental income divided by the property value. It looks good on paper but ignores the reality of owning property. Net Yield (which this calculator shows) subtracts all your expenses—insurance, property taxes, HOA fees, and repairs—to show you the true return on your investment.
Real estate investors often use the "1% Rule" as a quick filter. The rule states that the monthly rent should be at least 1% of the purchase price. For example, a $200,000 house should rent for at least $2,000/month. In today's high-interest market, properties meeting the 1% rule are hard to find, making Net Yield calculation even more critical.
Historically, a net rental yield of 5-8% is considered healthy for residential real estate. If your yield is below 3%, you might be earning less than you would in a risk-free High Yield Savings Account (HYSA), meaning the property is essentially losing you money unless it appreciates significantly in value.