Rental Yield Calculator
Is the US property worth it as an investment? Calculate gross and net rental yield plus the gross rent multiplier from purchase price, monthly rent and costs — in dollars.
Key facts
- Example: a $300,000 price and $2,000/month rent give an 8.0% gross rental yield — after 3% closing costs and before operating expenses, 7.77% net. The gross rent multiplier (GRM) is 12.5.
- Operating costs decide it: add about $7,800/year of property tax, insurance and maintenance and the net yield drops to ~5.2% — much closer to typical US multifamily cap rates of 3.5–5% (CBRE).
- The “1% rule”: when monthly rent reaches 1% of the price (here $3,000) the gross yield is ~12% and the GRM about 8 — a quick US screen for cash-flow potential.
FAQ
- What is a good rental yield?
- In US cash-flow markets gross yields of 6–8%+ are common. The net yield matters more because it accounts for closing and ongoing operating costs — it is lower. CBRE puts US multifamily cap rates around 3.5–5%; the “1% rule” is a quick first screen.
- How do gross and net rental yield differ?
- Gross yield = annual rent ÷ purchase price × 100. The net yield divides the annual rent (minus operating costs) by the purchase price plus closing costs — reflecting the real return more accurately.
- What is the gross rent multiplier (GRM)?
- The GRM (purchase price ÷ annual rent) shows how many annual rents the price equals. A lower GRM is more attractive; it serves as a quick screening metric when comparing similar properties (Wikipedia).