Rental Yield & Cap Rate Calculator
Estimate the return on a U.S. rental property with the three metrics investors actually use — gross yield, capitalization rate (cap rate), and cash-on-cash return. Enter the purchase price, expected rent, and operating costs to see whether a $400,000 four-plex in Texas or a $250,000 single-family rental in Ohio actually pencils out.
How is this calculated?
Gross yield = annual rent ÷ purchase price × 100. Cap rate = net operating income (NOI) ÷ purchase price × 100, where NOI deducts operating expenses (property tax, insurance, management, vacancy allowance, maintenance, HOA) but excludes mortgage costs and depreciation. Cash-on-cash return = annual pre-tax cash flow ÷ total cash invested × 100, factoring in mortgage payments. Federal income tax and state-tax treatment of rental income are excluded; consult a CPA for after-tax return.
Frequently Asked Questions
What's a good cap rate?
It depends on the market. Class A properties in major coastal metros often trade at 4%–5% cap rates because investors price in capital appreciation. Stable Sun Belt markets typically run 6%–8%. Higher-yield Midwest markets can show 8%–10%+ but carry higher tenant turnover and capital expenditure risk.
What's the difference between cap rate and cash-on-cash?
Cap rate measures the property's unlevered return — what it would yield if you paid all cash. Cash-on-cash measures the return on the actual cash you put in (down payment plus closing costs), so leverage amplifies it both ways. Use cap rate to compare properties; use cash-on-cash to evaluate your personal deal.
What operating expenses should I include?
Property tax (varies sharply by county and state, often 1%–3% of value annually), homeowners insurance, property management at 8%–10% of rent, an annual maintenance reserve of 5%–10% of rent, capital expenditure reserves, HOA dues, vacancy allowance of 5%–8%, and lawn or pest service if landlord-paid.
Are taxes and depreciation included?
No. The calculator returns pre-tax property-level metrics. Federal taxes on rental income depend on your bracket, depreciation deductions, and pass-through structure. State income tax adds another layer that varies widely. The IRS schedule E rules and state-tax disclaimers apply — talk to a CPA for the full after-tax picture.
Last updated: May 2026 · Rates sourced from IRS