Gross yield
rent ÷ price
Net yield
after running costs
Understanding rental yield
Rental yield is the annual return a property generates as a percentage of its value. It's the single most useful number for comparing investment properties of different prices — a £150,000 flat earning £900/month and a £400,000 house earning £1,800/month can be compared instantly once expressed as yields (7.2% vs 5.4%).
Gross yield is the headline figure: annual rent divided by purchase price. It's quick but misleading, because it ignores every cost of ownership. Net yield subtracts the real running costs — letting agent fees, maintenance, insurance, ground rent, and crucially the rent lost during void periods — to reveal what you actually earn. Net yield is typically 1–3 percentage points below gross, and it's the figure serious investors rely on.
A gross yield of 5–8% is generally considered healthy, though this varies enormously by location. High-yield areas (often 8%+) tend to carry more risk or need more work, while prime city locations may yield only 3–4% but deliver stronger long-term capital growth. There's no universally "good" number — only what works for your strategy and risk appetite.
Yield and cash flow answer different questions. Yield tells you how good the deal is; cash flow tells you whether you can afford to hold it. A property can show an attractive yield yet produce negative monthly cash flow once a large mortgage is included. That's why this calculator shows both — the financing-independent yield for comparing options, and the after-mortgage cash flow that determines whether the property pays you each month or costs you.