Enter the annual rental income, annual expenses, and property value into the calculator to determine the rental yield percentage.

## Rental Yield Formula

The following formula is used to calculate the rental yield of a property.

RY% = (I – E) / PV *100

• Where RY% is the rental yield percentage
• I is the annual income generated through rent
• E is the total annual expenses associated with the property
• PV is the property value

## Rental Yield Definition

What is a rental yield? A rental yield is defined as the ratio of the annual net profit generated from a property with respect to its current or purchase value.

## Example Problem

How to calculate rental yield?

1. First, determine the property value.

Typically, this is the current fair market value of the property. For this example, the property is found to be worth \$400,000.00

2. Next, determine the annual income.

On a monthly basis, this property generates \$2,500.00 in income. On an annual basis that is equal to \$30,000.00.

3. Next, determine the annual expenses.

Between repairs, maintenance, and taxes, the annual expenses come out to \$6,000.00.

4. Finally, calculate the rental yield.

Using the formula above, we find the rental yield to be (\$30,000.00-\$6,000.00) / \$400,000.00 * 100 = 6%.