Rental Yield Calculator United States 2026
Evaluating an investment property? See what it actually returns.
Calculate gross and net rental yield on investment property. Includes vacancy, management fees, mortgage cash flow analysis, and depreciation.
Gross yield only — deduct management fees, property taxes, insurance, and maintenance for net yield.
Select the question that matches where you are right now.
Rental yield measures the annual rental income as a percentage of the property's purchase price. Gross yield uses the raw rent figure; net yield deducts ongoing costs.
Annual rent ÷ property value × 100. A $300,000 property renting for $2,000/month produces: ($2,000 × 12) ÷ $300,000 × 100 = 8.0% gross yield.
In New York, 3–4% gross is typical. In Houston and Chicago, 5–7% is achievable. Regional areas often yield 7–10%+. Higher yields typically come with higher vacancy risk or lower appreciation.
High-yield properties tend to have lower capital growth and vice versa. The optimal investment depends on your goal: income (yield) or long-term wealth accumulation (capital growth).
Net yield accounts for all ongoing costs. A 5% gross yield property may only return 3.5% net after expenses. Net yield on the purchase price is what US investors call the capitalization rate (cap rate).
Property management fees (8–10% of rent), property taxes ($3,000–$8,000/year), HOA fees, landlord insurance ($1,000–$2,000/year), maintenance/repairs (budget 1% of value/year), and vacancy periods.
(Annual rent − annual costs) ÷ property value × 100. On a $300k property with $24,000 rent and $9,000 costs: ($24,000 − $9,000) ÷ $300,000 = 5.0% net.
Net yield as commonly calculated does not deduct mortgage interest — that is captured in cash flow analysis. Net yield is a property performance metric independent of financing.
Rental yields vary significantly across major US metro areas.
Gross yields typically 3–4% in Manhattan. Outer boroughs may yield 4–5.5%. High property values compress yields despite strong rents.
Similar to New York: 3.5–4.5% typical in established areas. Some suburban and inland areas reach 5–6%.
Strong performers: 5–7.5% gross yields across many neighborhoods. Lower entry prices with competitive rents. Phoenix also in this range.
After calculating yield, these calculators help complete your investment analysis.
Include capital growth alongside rental yield for a complete investment return picture.
ROI calculator →Calculate the maximum investment loan your income can support.
Borrowing capacity calculator →Model the tax when you sell — including the 25% maximum rate on the depreciation you claimed (unrecaptured Section 1250 gain).
Capital gains tax calculator →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.
Rental 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 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.
Frequently asked Frequently 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.
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.