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Rental Yield Calculator

Formula

The formula to calculate the Rental Yield is:

$RY = \left( \frac{I - E}{PV} \right) \times 100$

Where:

$RY$ is the Rental Yield (%)
$I$ is the Annual Income from Rent
$E$ is the Total Annual Expenses
$PV$ is the Property Value

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. It is a measure used by property investors to assess the profitability of their investment. A higher rental yield indicates a more profitable investment.

Example Calculation

Let's assume the following values:

Annual Income from Rent (I) = $24,000
Total Annual Expenses (E) = $6,000
Property Value (PV) = $300,000

Using the formula:

$RY = \left( \frac{24000 - 6000}{300000} \right) \times 100 = \left( \frac{18000}{300000} \right) \times 100 = 6\%$

The Rental Yield is 6%.