# Rental Yield Calculator

## About Rental Yield Calculator (Formula)

A Rental Yield Calculator is a tool used by real estate investors to assess the potential return on investment (ROI) of a rental property. It helps investors determine the annual rental income generated by the property as a percentage of the property’s cost or value. This calculation provides valuable insights into the profitability and attractiveness of an investment property.

The formula to calculate rental yield is as follows:

Rental Yield = (Annual Rental Income / Property Cost or Value) * 100

Where:

• Annual Rental Income: The total rental income generated by the property in a year. This can be calculated by multiplying the monthly rent by 12 (for yearly income) or any other applicable time frame.
• Property Cost or Value: The total cost of purchasing the property, including purchase price, closing costs, and any additional expenses related to acquiring the property.

You multiply the ratio of annual rental income to property cost or value by 100 to express the rental yield as a percentage.

For example, let’s say you purchase a property for \$200,000 and expect to receive \$1,500 in monthly rent, which totals to \$18,000 in annual rental income. The rental yield would be:

Rental Yield = (\$18,000 / \$200,000) * 100 = 9%

So, in this case, the rental yield would be 9%, indicating that you can expect to earn a 9% return on your investment annually based on the rental income generated by the property.

Investors often use rental yield as a quick measure to compare the potential returns of different properties or to assess the attractiveness of an investment opportunity. However, it’s important to note that rental yield is just one aspect of investment analysis, and other factors like property appreciation, expenses, and market conditions should also be considered when making investment decisions.