Rental Yield Calculator United States 2026
Gross and net rental yield, the cash flow after mortgage interest, and the cash-on-cash return on the down payment — with vacancy, management fees and operating costs taken off before anything is called income.
Gross yield is annual rent over the property value, which is the number every listing quotes and the least useful one: it ignores every cost.
| Gross rent | $14,400.00 |
|---|---|
| Expenses | -$9,152.00 |
| Vacancy | -$553.85 |
| Mortgage interest | -$20,800.00 |
| Cash flow | -$16,105.85 |
| Rent income | $14,400.00 |
|---|---|
| Expenses | $9,152.00 |
| Vacancy | $553.85 |
| Mortgage | $20,800.00 |
| Gross yield | 3.6% |
|---|---|
| Net yield | 1.2% |
| Yr 1 | -$16,589.02 |
|---|---|
| Yr 2 | -$17,086.69 |
| Yr 3 | -$17,599.29 |
| Yr 4 | -$18,127.27 |
| Yr 5 | -$18,671.09 |
| Yr 6 | -$19,231.22 |
| Yr 7 | -$19,808.16 |
| Yr 8 | -$20,402.40 |
| Yr 9 | -$21,014.48 |
| Yr 10 | -$21,644.91 |
How the rental yield calculator works
Gross yield is annual rent over the property value, which is the number every listing quotes and the least useful one: it ignores every cost. Net yield takes vacancy, property management and operating costs off the rent first — the classic mistake is to omit vacancy and repairs and call the result net. Cash flow goes one step further and subtracts mortgage interest, and it is the number that decides whether you can hold the property. Cash-on-cash return measures that cash flow against the down payment you actually put in, which is what most investors mean by return. A shortfall is a passive loss: it is deductible against other income only up to $25,000 for an active participant, phasing out between $100,000 and $150,000 of modified adjusted gross income, and otherwize carries forward until you have passive income or sell. Depreciation over 27.5 years shelters income without costing cash, and is recaptured on sale.
Formula: gross yield = annual rent ÷ value · net yield = (rent − vacancy − costs) ÷ value · cash flow = net rent − mortgage interest · cash-on-cash = cash flow ÷ deposit
How rental yield is calculated on investment property
Gross yield formula
Gross rental yield = (Annual rental income ÷ Property value) × 100. For a $350,000 property renting at $2,000/month: ($2,000 × 12) ÷ $350,000 × 100 = 6.9% gross yield.
| Property value | Monthly rent | Annual rent | Gross yield |
|---|---|---|---|
| $200,000 | $1,400 | $16,800 | 8.4% |
| $300,000 | $1,800 | $21,600 | 7.2% |
| $400,000 | $2,200 | $26,400 | 6.6% |
| $500,000 | $2,500 | $30,000 | 6.0% |
| $750,000 | $3,000 | $36,000 | 4.8% |
Rental yield examples by city and property type — 2026
| City/area | Typical property price | Monthly rent | Gross yield |
|---|---|---|---|
| New York (Manhattan) | $800,000 | $3,000 | 4.5% |
| New York (outer boroughs) | $500,000 | $2,200 | 5.3% |
| Los Angeles metro | $650,000 | $2,500 | 4.6% |
| Chicago established | $300,000 | $1,800 | 7.2% |
| Houston metro | $280,000 | $1,700 | 7.3% |
| Phoenix metro | $350,000 | $1,800 | 6.2% |
| Regional US | $200,000 | $1,300 | 7.8% |
Gross yield vs net yield — what the numbers really mean
Typical annual costs on a $600,000 property
Management fees: $2,900–$3,600 (8–10% of a $3,000/month rent). Property taxes: $3,000–$8,000 depending on the state. HOA fees: $0–$4,000. Landlord insurance: $1,200–$2,500. Maintenance (1% rule): $6,000. Total: approximately $13,000–$24,000/year.
Impact on net yield
A 7.2% gross yield on a $300,000 property with $11,000/year in costs produces: ($21,600 − $11,000) ÷ $300,000 = 3.5% net yield. This is significantly lower than the gross figure and is the true income return before mortgage interest. Net operating income divided by purchase price is what US investors call the capitalization rate (cap rate) — so this calculator's net yield is effectively a cap rate on your purchase.
By cityRental yield comparison across major US cities — 2026
These figures are indicative ranges for established residential property. Yields vary significantly by suburb, property type, and condition.
| City | Typical gross yield range | Growth outlook | Comment |
|---|---|---|---|
| New York | 3.0–5.5% | Moderate | High prices compress yields |
| Los Angeles | 3.5–5.0% | Moderate | Rent control limits some upside |
| Chicago | 5.0–7.0% | Strong | Strong rental demand, affordable entry |
| Houston | 5.5–7.5% | Strong | No state income tax boosts returns |
| Phoenix | 4.5–6.0% | Strong | Population growth supports demand |
| Philadelphia | 5.0–7.0% | Moderate | Affordable entry prices |
| San Antonio | 5.5–7.5% | Variable | High yields in emerging areas |
Rental property losses — the US passive activity rules and the $25,000 allowance
When costs exceed rental income
If mortgage interest, operating expenses, and depreciation add up to more than the rent, the property runs at a tax loss. Under the passive activity loss rules (IRC Section 469), rental real estate losses are passive: they generally offset only passive income — not wages or salary. Any excess is suspended and carried forward on Form 8582 to future years.
The $25,000 special allowance
There is one exception for everyday landlords. If you actively participate in the rental (approving tenants, setting rents) and own at least 10% of it, you can deduct up to $25,000 of rental losses against ordinary income. The allowance phases out by 50 cents for every dollar of modified adjusted gross income (MAGI) above $100,000 and is gone entirely at $150,000 MAGI. Example: with MAGI of $90,000, a $10,000 rental loss deducted at a 22% marginal rate saves $2,200 of federal tax. At $125,000 MAGI the cap falls to $12,500. Above $150,000 MAGI there is no current-year deduction — the loss is suspended, not lost.
Real estate professionals and selling
Taxpayers who spend more than 750 hours a year — and more than half of their total working time — in real property trades or businesses in which they materially participate can treat rental losses as nonpassive and deduct them without the cap. For everyone else, suspended losses are released when the property is sold in a fully taxable sale. Also plan for depreciation recapture: on sale, the part of your gain attributable to depreciation deductions (unrecaptured Section 1250 gain) is taxed at a maximum federal rate of 25%.
Positive cash flowPositive cash flow — when rental income exceeds costs
What is positive cash flow?
A rental is cash-flow positive when the rent covers every cost, including the mortgage payment. The net rental profit is taxable income reported on Schedule E at your marginal rate — though the depreciation deduction (residential buildings are written off straight-line over 27.5 years) often shelters part or all of it, so a property can put cash in your pocket while showing little taxable profit.
Where to find positive cash flow
Positive cash flow is more common in Midwest and South markets (Chicago, Houston, Philadelphia, and smaller regional metros) where prices have not escalated as rapidly as rents. Duplexes, small multifamily buildings, and commercial property often produce stronger cash flow — as does a larger down payment that shrinks the mortgage payment.
FAQFrequently asked Frequently asked questions
Where these figures come from
Property and mortgage figures on this page are drawn from the Federal Reserve (rate data), the Consumer Financial Protection Bureau (mortgage rules), the IRS (rental property tax rules), Fannie Mae, and HUD.
- US mortgage rates — Federal Reserve / FRED — 30-Year Fixed Mortgage Average.
- Mortgage & closing rules — CFPB — Owning a Home.
- Passive activity loss rules ($25,000 allowance, $100k–$150k MAGI phase-out) — IRS Publication 925 — Passive Activity and At-Risk Rules.
- Rental income, expenses & 27.5-year depreciation — IRS Publication 527 — Residential Rental Property.
- Capital gains & unrecaptured Section 1250 gain (25% maximum rate) — IRS Topic 409 — Capital Gains and Losses.
- Rental income for mortgage qualifying (75% of gross rent) — Fannie Mae Selling Guide — Rental Income.
- FHA & federal housing programs — HUD — US Department of Housing and Urban Development.
Last checked: July 2026. Rates and thresholds are reviewed against the source of record each November, when annual adjustments for the following tax year are published.
You might also be interested in Borrowing CapacityMax investment loan Mortgage RepaymentLoan repayments Capital Gains TaxTax when you sell LTVLoan-to-value ratio ROITotal property returns Pay CalculatorYour take-home pay Rate this calculatorQuick answers
$600k property — $2,250/month rent 4.5% gross yield
A $600,000 property renting at $2,250/month generates a 4.5% gross yield ($27,000/year). After typical costs (~$11,000/year), the net yield is approximately 2.6–3.2%.
| Gross annual rent | $27,000 |
|---|---|
| Gross yield | 4.5% |
| Est. annual costs | $9,000–$13,000 |
| Net yield estimate | ~2.6–3.2% |
| Rent vs mortgage payment | $2,250/mo rent vs ~$3,200/mo (20% down, 7%) |
| Cash flow position | Negative |
- Increase rent $100/month Add $1,200/year gross
- Passive loss deduction Up to $25k if MAGI under $100k
- Capital growth needed ~4%+ per year to profit overall
- Review rent annually Market + local vacancy
- Compare: Houston equivalent Same $ often yields 6%+
$800k property — $2,600/month rent 3.9% gross yield
An $800,000 property renting at $2,600/month generates a 3.9% gross yield ($31,200/year) — typical of coastal metros where high prices compress yields.
| Gross annual rent | $31,200 |
|---|---|
| Gross yield | 3.9% |
| Est. annual costs | $13,000–$17,000 |
| Net yield estimate | ~2.2–2.8% |
| Cash flow (7% mortgage, 20% down) | ~−$1,500–$2,000/month |
| Passive loss (24% bracket) | $6,000–$8,000/year deduction |
- Capital growth needed for profit 5%+ per year to justify
- Sun Belt alternative Higher-yield markets
- Larger down payment Reduces interest cost
- Rent increase potential Check local market
- Hold long-term Rent grows, yield improves
Houston metro rental yield 5.5–7.5% gross yield
Houston-area rentals currently yield 5.5–7.5% gross — well above the coastal metros. No state income tax, strong job and population growth, and affordable prices make Texas a popular cash-flow market in 2026.
| Gross yield range | 5.5–7.5% |
|---|---|
| Net yield range | ~3.5–5.0% |
| Median property price | $330,000 |
| Monthly rent (median) | $1,900–$2,300 |
| vs New York comparable | 2–3% higher yield |
| Property tax (TX) | High — ~2% of value/year |
- Best-yielding areas Suburbs near job centers
- Vacancy rates Low — strong demand
- New supply risk Monitor building permits
- Domestic migration Sustained demand driver
- Compare: Phoenix, Atlanta Similar yield, similar growth
Negative cash flow rental — US tax treatment Passive loss rules apply
When rental income is below total costs (mortgage interest, property tax, insurance, depreciation), the loss is a passive loss under IRC Section 469. Up to $25,000 can reduce ordinary income if your modified AGI is under $100,000 (phasing out to zero by $150,000); otherwise it carries forward.
| What it means | Rental income < total costs |
|---|---|
| $25k special allowance | If MAGI under $100,000 |
| Allowance phases out | Fully gone by MAGI $150,000 |
| Above the limit | Loss carries forward |
| Depreciation | 27.5-yr straight line — non-cash deduction |
| Real estate professional | Can deduct losses in full |
- On a $600k property growing 4% $24k gain vs cash cost
- If growth is flat Annual loss every year
- vs positive cash-flow property Trade yield for growth
- Sell within 5yr? May not recover closing costs
- Consult a CPA Passive-loss rules are complex
Net yield — gross yield minus costs Gross − 1.5–2.5% typical
Net rental yield deducts all ongoing property costs from gross rent. A 4.5% gross yield typically becomes 2.5–3.5% net after property management, property taxes, insurance, and maintenance.
| Gross yield | Annual rent ÷ property value |
|---|---|
| Net yield | (Rent − costs) ÷ property value |
| Typical annual costs ($600k) | $9,000–$13,000 |
| Property tax | 0.5–2.2% of value/year |
| Property management | 8–10% of gross rent |
| 1% maintenance rule | $6,000/year on $600k property |
- Self-manage Saves 8–10% of rent
- Shop insurance annually Compare carriers
- Minimize vacancy Strong listing + market rent
- Depreciation Shelters income (27.5-yr)
- Net yield = cap rate 3%+ net considered solid
City yield comparison — New York vs Chicago 3–4% vs 5–7%
New York gross yields average 3–4% because prices are high relative to rents. Chicago yields 5–7% on far lower entry prices. Higher-yield metros often carry lower price-growth expectations.
| New York gross yield | 3.0–4.0% |
|---|---|
| Los Angeles gross yield | 3.5–4.5% |
| Chicago gross yield | 5.0–7.0% |
| Houston gross yield | 5.5–7.5% |
| Phoenix gross yield | 4.5–6.0% |
| Regional US gross yield | 6–10%+ |
- Higher yield: more income Positive cash flow more likely
- Lower yield: growth bet Coastal metros rely on appreciation
- Diversify by metro Different yield/growth profiles
- Check local vacancy High-yield areas can be slower to rent
- Yield compression Popular metros: prices outrun rents
$400,000 property — $2,200/month rent 6.6% gross yield
At $400,000 with $2,200/month rent, the gross yield is 6.6% ($26,400/year) — achievable across the Midwest, Texas, and Southeast.
| Property value | $400,000 |
|---|---|
| Monthly rent | $2,200 |
| Annual rent | $26,400 |
| Gross yield | 6.6% |
| Est. running costs | $7,000–$9,000/year |
| Net yield estimate | ~4.4–4.9% |
- At $1,900/month rent 5.7% gross — still strong
- Cash flow at 20% down, 7% rate Positive in many markets
- Check tenant demand High yield can mean thin demand
- Property management 8–10% of rent
- Growth outlook Varies widely by metro
$500,000 property — $2,200/month rent 5.3% gross yield
At $500,000 with $2,200/month rent, the gross yield is 5.3% ($26,400/year) — a common profile in Sun Belt and suburban markets.
| Property value | $500,000 |
|---|---|
| Monthly rent | $2,200 |
| Annual rent | $26,400 |
| Gross yield | 5.3% |
| Net yield estimate | ~3.5–4.0% |
| Mortgage ($400k loan, 7%, 30-yr) | $2,661/month |
- Positive cash flow? Depends on loan size and costs
- Break-even Near this yield at 20% down
- Capital growth potential Moderate in growth metros
- Depreciation Adds a tax shelter
- Management: self vs pro 8–10% of rent
$600,000 property — $2,200/month rent 4.4% gross yield
At $600,000 with $2,200/month rent, the gross yield is 4.4% ($26,400/year) — around the national middle for a standard single-family rental.
| Property value | $600,000 |
|---|---|
| Monthly rent | $2,200 |
| Annual rent | $26,400 |
| Gross yield | 4.4% |
| At $2,500/month rent | 5.0% gross |
| Net yield estimate | ~3.0–3.6% |
- Houston vs New York at $600k Houston: better yield
- Depreciation $17k+/year on the building
- Rental demand at $600k Mid-market: solid demand
- Break-even Bigger down payment helps
- 5yr growth outlook Location-dependent
$700,000 property — $2,200/month rent 3.8% gross yield
At $700,000 with $2,200/month rent, the gross yield is 3.8% ($26,400/year) — typical of higher-cost metros with moderate growth potential.
| Property value | $700,000 |
|---|---|
| Monthly rent | $2,200 |
| Annual rent | $26,400 |
| Gross yield | 3.8% |
| Mortgage ($560k loan, 7%) | $3,726/month |
| Cash flow | Typically negative in these metros |
- Passive loss on shortfall Up to $25k if MAGI under $100k
- Capital-growth cushion 4–6% growth potential
- At $2,600/month rent 4.5% gross
- Depreciation benefit $20k+/year on newer builds
- Gross vs net gap ~0.6% in ongoing costs
$800,000 property — $2,200/month rent 3.3% gross yield
At $800,000 with $2,200/month rent, the gross yield is only 3.3% — a profile that relies mainly on capital growth. Coastal metros commonly trade here.
| Property value | $800,000 |
|---|---|
| Monthly rent | $2,200 |
| Annual rent | $26,400 |
| Gross yield | 3.3% |
| New York equivalent | Often $2,600–$2,800/mo = 3.9–4.2% |
| Houston equivalent | Often $3,500–$4,000/mo = 5.3–6.0% |
- New York at $800k typical yield 3.0–3.5% gross
- Houston at $800k typical yield 5.0–6.0% gross
- Invest where yield is better Sun Belt metros currently
- Both long-term Coastal ~4%/yr; Sun Belt varies
- Depreciation $23k+/year on the building
New York (Manhattan) — $700k–$1.5M+ condos 2.5–3.5% gross
Manhattan commands among the highest prices in the US but its lowest yields — typically 2.5–3.5% gross. At standard financing, cash flow is usually negative once the mortgage and common charges are paid.
| Price range | $700k–$1.5M+ |
|---|---|
| Gross yield | 2.5–3.5% |
| Net yield | 1.5–2.5% |
| Rent on a $1M condo | $3,000–$4,000/month |
| Cash flow | Usually negative |
| Common charges + taxes | Can exceed $2,000/month |
- Strategy is capital growth Income rarely stacks up alone
- Co-op vs condo Financing and rental rules differ
- High carrying costs Taxes + common charges
- Consider outer boroughs 4–5.5% with upside
New York outer boroughs — $500k–$800k 4.0–5.5% gross
Brooklyn, Queens, and the Bronx offer better yields of 4.0–5.5% gross at $500k–$800k. Transit access and steady demand support long tenancies.
| Price range | $500k–$800k |
|---|---|
| Gross yield | 4.0–5.5% |
| Net yield | 2.5–3.5% |
| Rent on a $600k property | $2,600–$3,200/month |
| Cash flow | Tight at 20% down |
| Tenant profile | Families — longer leases |
- Transit links Subway + LIRR corridors
- Longer tenancies Lower vacancy than Manhattan
- Growth potential Regeneration neighborhoods
- Compare NJ commuter towns Similar yield, lower entry
Los Angeles metro — $700k–$1.2M 3.5–4.5% gross
Los Angeles shows gross yields of 3.5–4.5% at $700k–$1.2M. Like other coastal metros, negative cash flow is common at standard financing; the case rests on long-run appreciation.
| Price range | $700k–$1.2M |
|---|---|
| Gross yield | 3.5–4.5% |
| Net yield | 2.0–3.0% |
| Rent on a $900k property | $3,200–$4,000/month |
| Cash flow | Typically negative |
| Property tax | ~1.1–1.25% (Prop 13 base) |
- Prop 13 Caps assessment growth — predictable taxes
- Rent control Check local ordinances
- Compare Inland Empire Higher yield, lower entry
- Long-term LA case Supply constraints + demand
Chicago metro — $200k–$350k 5.0–7.0% gross
Chicago offers gross yields of 5.0–7.0% at $200k–$350k entry prices — strong cash flow for a major metro, offset by high property taxes.
| Price range | $200k–$350k |
|---|---|
| Gross yield | 5.0–7.0% |
| Net yield | 3.0–4.5% |
| Rent on a $260k property | $1,900–$2,300/month |
| Property tax | High — 2.0–2.5% of value/year |
| Cash flow | Positive at 25% down |
- Property taxes The key drag — budget carefully
- Neighborhood selection Ranges widely by area
- 2–4 unit stock House-hack potential
- Compare Indianapolis, Milwaukee Similar yields
Phoenix metro rental yield 4.5–6.0% gross yield
Phoenix yields 4.5–6.0% gross at $350k–$500k entry prices. Rapid in-migration and a growing job base have supported both rents and prices.
| Gross yield range | 4.5–6.0% |
|---|---|
| Net yield range | ~3.0–4.5% |
| Typical price | $350,000–$500,000 |
| Monthly rent (median) | $1,800–$2,200 |
| Vacancy | Low — strong in-migration |
| Property tax | Moderate — ~0.6% of value/year |
- Best areas Suburbs near employment
- Population growth Interstate migration
- Cooling/insurance costs Budget for summer
- Compare Houston, Atlanta Similar profile
- Yield vs growth Prices rising — expect compression
Philadelphia metro rental yield 5.0–7.0% gross yield
Philadelphia offers 5.0–7.0% gross at $200k–$350k entry prices — among the best yields of the large Northeast metros, driven by affordable row-home stock and steady demand.
| Gross yield range | 5.0–7.0% |
|---|---|
| Net yield range | ~3.5–5.0% |
| Typical entry price | $200,000–$350,000 |
| Monthly rent | $1,500–$2,000 |
| Void risk | Low in job-connected neighborhoods |
| Local taxes | Property + city wage tax — factor in |
- Best areas Near transit and universities
- Row-home stock Lower price point
- Older stock Budget for repairs
- Cash flow Positive achievable at 25% down
- Compare Pittsburgh Similar yields
Regional US gross yields — 6–10%+ Higher yield, higher risk
Smaller Midwest and Southeast markets (Cleveland, Memphis, Birmingham, Indianapolis) deliver 6–10%+ gross. Weigh the income against vacancy risk, slower price growth, and lower liquidity.
| Gross yield range | 6–10%+ |
|---|---|
| Capital growth | Variable — location dependent |
| Vacancy risk | Higher than big metros |
| Liquidity | Slower resale market |
| Entry prices | From under $150,000 |
| Cash flow | Strong while occupied |
- Research local demand Jobs + population trend
- Inspection matters Cheap stock can hide big bills
- Property management 8–10% of rent
- Class B vs Class C Tenant quality vs yield
- Regional hubs Balance risk and yield
Break-even — what yield covers the costs? Depends on down payment and rate
Break-even is where rent exactly covers running costs plus the mortgage. At a 7% rate with 20% down, most single-family rentals need roughly a 6.5–7.5% gross yield to break even on cash flow — which is why cash-flow investors favor lower-cost Midwest and Sun Belt markets.
| Definition | Rent = all property costs |
|---|---|
| At 7% rate, 20% down | Need ~6.5–7.5% gross yield |
| With 40% down | ~4.5–5.5% gross breaks even |
| Coastal metros | Hard to break even on cash flow |
| Sun Belt / Midwest | More achievable |
| Interest-only basis | Lowers the required yield |
- Compute your own break-even (Mortgage + costs) ÷ value
- Larger down payment Lowers the required yield
- Rate sensitivity 1% rate rise moves break-even ~0.7%
- Property taxes Vary widely by state
- Keep reserves 3–6 months of costs
Positive cash flow — yield exceeds all costs Achievable in higher-yield metros
A rental is cash-flow positive when income exceeds all property costs including the mortgage. In coastal metros this is rare. It is achievable in Sun Belt and Midwest markets, or with a large down payment.
| Definition | Rent > all property costs |
|---|---|
| When achievable | Large down payment + high yield |
| Chicago at $260k? | Often positive at 25% down |
| Houston / Phoenix? | More achievable at current yields |
| Regional at 8% yield? | Often positive — risk varies |
| Self-directed IRA | Tax-deferred or tax-free income |
- Strategy: 25–35% down Cuts interest cost sharply
- House-hack a 2–4 unit Live in one, rent the rest
- Depreciation Adds a tax shelter on top
- Positive cash flow taxed Rental income taxed at your rate
- Reinvest cash flow Compound into the next deposit
$1,000,000 property — $2,200/month rent 2.6% gross yield
At $1,000,000 with $2,200/month rent, the gross yield is 2.6% ($26,400/year). At this level the investment is almost entirely a bet on capital growth; cash flow is deeply negative at typical loan-to-value.
| Property value | $1,000,000 |
|---|---|
| Monthly rent | $2,200 |
| Annual rent | $26,400 |
| Gross yield | 2.6% |
| Mortgage ($800k, 7%, 30-yr) | $5,322/month |
| Break-even rent | ~$5,900/month |
- New York $1M typical rent $3,000–$4,000/mo — still negative
- Houston $1M typical rent $4,500–$5,500/mo — closer to break-even
- Depreciation $29k+/year softens the shortfall
- Passive loss Carries forward above MAGI $150k
- Capital-growth thesis Must grow >5% to justify
Worked examples
| Inputs | Gross Rental Yield | Note |
|---|---|---|
| 900,000 property let at 850 a week | 1.6% | 4.91% gross, 3.00% net, and negative cash flow after interest |
| The same rent on a 650,000 property | 2.22% | yield is a ratio — the cheaper property yields 6.80% |
| Bought outright, no mortgage | 1.6% | cash flow turns positive the moment interest goes |
FAQFrequently asked questions
What is a good rental yield in the United States?
A 'good' yield depends on your investment goal. In New York, 3–4% gross is typical. In Chicago and Houston, 5–7.5% is achievable. Investors focused on appreciation accept lower yields; those focused on income target higher yields, often in the Midwest or Sun Belt markets.
What is the difference between gross and net yield?
Gross yield uses raw rental income. Net yield deducts ongoing costs (management fees, property taxes, insurance, maintenance). A 4.5% gross yield may be only 2.5–3% net after costs. Use net yield for genuine return comparisons.
Can I deduct rental property losses against my salary?
Only within limits. Rental losses are passive under IRC Section 469, so they generally offset only passive income — not wages. If you actively participate and your modified adjusted gross income (MAGI) is $100,000 or less, up to $25,000 of losses can offset other income; that allowance phases out between $100,000 and $150,000 MAGI. Real estate professionals (750+ hours and more than half of working time in real property trades, with material participation) are exempt from the cap. Anything disallowed carries forward — it is suspended, not lost.
How does rental yield affect how much I can borrow?
Lenders typically count 75% of gross rent when qualifying you for an investment property loan — Fannie Mae guidelines apply a 25% haircut for vacancy and maintenance. Rent of $2,000/month counts as $1,500/month of qualifying income. If the property runs at a loss, the shortfall is treated as a monthly obligation that reduces your maximum loan.
What is the difference between rental yield and cap rate?
Cap rate (capitalization rate) is net operating income — rent minus operating expenses, before mortgage payments — divided by property value. That is essentially the net yield this calculator reports. Gross yield ignores expenses entirely. US investors and agents usually quote cap rates when comparing rental properties, so use the net figure for apples-to-apples comparisons. Sources
The sources behind this calculator
- Consumer Financial Protection Bureau — the federal guide to buying a home
Last checked: September 2026. Duty scales are the state revenue offices' own; they change at each state budget and are verified against the office when they do.