Tools
What does a rental property earn? Rental yield calculator
Net yield is what you keep each year after costs, divided by everything you invested. Enter the price, closing costs, rent and expenses: the calculator gives you gross and net yield and how many years it takes to get your money back.
How it is calculated
- Gross yield = monthly rent × 12 ÷ purchase price.
- Net annual income = monthly rent × months rented − monthly costs × 12 − yearly costs.
- Net yield = net annual income ÷ (price + closing costs).
- Payback years = (price + closing costs) ÷ net annual income.
Worked example
A 60,000-dollar apartment with 3,000 in closing costs, rented at 450 a month for 11 months, with 60 a month in HOA and upkeep and 300 a year in other costs: net income is 3,930 dollars a year. Gross yield is 9%, net yield 6.2%, and payback takes about 16 years. The gap between 9% and 6.2% is exactly what listings don’t tell you.
What the calculator leaves out
- Appreciation, which no formula can predict.
- Financing: if you borrow, add the interest to yearly costs.
- Taxes on rental income, which depend on your situation in Venezuela and, if you live abroad, in your country of residence. Ask an accountant.
Check the paperwork before paying. A high yield is worthless if the property has a title problem or a debt. Have a lawyer check the title at the public registry before you hand over any money.
Questions people ask
What is the difference between gross and net yield?
Gross yield divides a full year of rent by the purchase price, with nothing taken off. Net yield subtracts vacant months and all costs (HOA, upkeep, taxes, insurance, repairs) and divides by everything you invested, closing costs included. Net is the one that matters for a decision.
Which closing costs should I enter?
Everything you pay to get the property in your name and ready to rent: lawyer's fees, registry and notary costs, commissions and initial repairs. Ask your lawyer for the exact figure for your deal.
Why 11 months and not 12?
Because there are almost always vacant weeks between tenants. Using 11 or even 10 months gives a more realistic figure than assuming full occupancy.