Rental Yield & Cap Rate Calculator
What a let property really returns, after vacancy, costs and the loan.
From rent to cash flow
Where the rent goes
How this was calculated
Results are estimates for general information and planning, not financial advice. Banks and institutions may calculate differently (rounding, fees, rate changes). Confirm figures with your lender or a qualified adviser before deciding.
About the Rental Yield & Cap Rate Calculator
Rent divided by price is only the start. A let property’s real return depends on empty weeks, repairs, letting fees, property tax, insurance and dues — and then on the loan. This calculator works out every measure investors and lenders use from the same inputs: gross and net rental yield, the cap rate, the gross rent multiplier, net operating income, monthly cash flow, the cash-on-cash return on the money you actually put in, the debt service coverage ratio and the break-even occupancy — the share of the year that has to be let for the property to pay its way.
For India there is a tax view as well: the annual value after municipal tax, the 30% standard deduction on house-property income, the loan interest deducted in full for a let property, and the limit on setting a loss against other income — so you see the cash flow after tax, not just before it.
How to use it
- Enter the purchase price and the purchase costs — stamp duty, registration, brokerage and legal fees — as a percentage of the price or an amount.
- Enter the rent per month or per year, and a vacancy allowance for the weeks it stands empty (5% is about two and a half weeks a year).
- Enter the running costs: repairs and letting or management as a share of the rent, and property tax, insurance, society or HOA dues and anything else as amounts for a year.
- If you are borrowing, enter the share of the price you borrow, the rate, the term and the loan’s one-time fees. Leave the share at 0 for a cash purchase.
- Add the price growth you expect, for the first-year total return.
- For India, enter your tax rate (30% plus 4% cess is 31.2%) to see the house-property tax and the cash flow after it; leave it at 0 to switch the tax view off.
- Read the measures, the income statement from rent down to cash flow, then copy the summary or download the CSV.
Examples
3% purchase costs · 5% vacancy · 5% repairs · 8% management · 3,000 property tax · 1,200 insurance
NOI 15,576 · gross yield 8% · net yield 5.04% · cap rate 5.19% · gross rent multiplier 12.5 · break-even occupancy 30.1%
Payment 1,516.96 · cash flow −218.96 a month · cash-on-cash −3.7% on 71,000 invested · DSCR 0.86 · break-even occupancy 105.95%
The rent no longer covers the loan: break-even occupancy above 100% means even a fully let year leaves a shortfall. The first-year total return is still 12.75% once 3% price growth and the principal repaid are counted. Without the loan fees the cash invested is 69,000 and the cash-on-cash return −3.81%.
7% purchase costs · 5% vacancy · 5% repairs · no letting fee · 12,000 property tax · 4,000 insurance · 36,000 society dues · 20,000 loan fees · 31.2% tax rate
Gross yield 3.75% · cap rate 2.73% · NOI 218,000 · cash flow −30,431 a month
House property: annual value ₹2,73,000 less the 30% deduction and ₹4,71,724 of first-year interest is a loss of ₹2,80,624 — ₹2,00,000 set off against other income (saving ₹62,400 at 31.2% under the old regime) and ₹80,624 carried forward.
Annual value ₹6,72,000 · 30% deduction ₹2,01,600 · taxable ₹4,70,400 · tax at 31.2% ₹1,46,765
Common uses
- Compare two or three properties on cap rate and net yield rather than headline rent.
- Check whether the rent will cover the mortgage, and what shortfall to budget for.
- See what a lender will make of the deal (DSCR, break-even occupancy).
- Work out the cash flow after tax on an Indian let property with a home loan.
The measures, and what each is for
- Gross rental yield = yearly rent ÷ price. The quick comparison between properties; it ignores every cost.
- Net operating income (NOI) = rent − vacancy − operating expenses. Before the loan and before tax: the property’s own earning power.
- Net rental yield = NOI ÷ (price + purchase costs). What you earn on everything you had to spend to own it.
- Cap rate = NOI ÷ price. The market’s measure, which leaves purchase costs out so that properties can be compared; a higher cap rate means a cheaper property for the income, and usually more risk.
- Gross rent multiplier = price ÷ yearly rent, also read as the price-to-rent ratio: the years of rent it takes to buy the home.
- Cash flow = NOI − loan payments, the money left each year (and month).
- Cash-on-cash return = cash flow ÷ the cash you put in (down payment + purchase costs + loan fees). What your own money earns.
- Debt service coverage ratio (DSCR) = NOI ÷ loan payments. Lenders for let property usually want more than 1; below 1 the rent does not cover the loan.
- Break-even occupancy = (operating expenses + loan payments) ÷ yearly rent: the share of the year that must be let to break even. Above 100% there is no occupancy that pays.
- First-year total return adds the principal repaid and the price growth you expect to the cash flow, over the cash invested — the measure that explains why a cash-flow-negative property can still be bought.
Getting the inputs right
The measures are only as good as the costs you put in.
- Vacancy: even a good let has gaps between tenants. 5% is about two and a half weeks a year; a holiday or student let needs far more.
- Repairs: a share of the rent (5%–10% is common) is a better guess than a flat amount, because rent follows the property’s size and quality. Big items — a roof, a boiler, painting between tenants — are lumpy, so take an average over several years.
- Management: a letting agent’s fee is a share of the rent collected, so the calculator charges it on the rent after vacancy.
- Purchase costs: stamp duty or transfer tax, registration, brokerage, legal and survey fees, and anything you had to spend to make the property lettable.
- Loan fees are counted in the cash you invest, which is what the cash-on-cash return is measured against.
Nothing here is inflated over time: every figure is for the first year. For a long projection with rising rents and costs, use the rent vs buy calculator or the NPV and IRR calculator.
India: tax on income from house property
Rent from a let property is taxed under “Income from house property”. The Income-tax Act, 2025 sets the annual value as the higher of the sum the property might reasonably be expected to fetch and the actual rent received or receivable, and then reduces it “by the taxes (including service taxes) levied by a local authority in respect of such property, actually paid during the tax year by the owner” (section 21). Section 22(1) then allows two deductions: “30% of the annual value as determined under section 21” — a flat allowance, whatever you really spend on repairs — and all the interest on money borrowed to buy, build, repair or renew the property.
A loss from house property is set off against your other income up to ₹2,00,000 a year (section 109(1)(b)); anything left is carried forward for up to eight tax years and set off only against house-property income (section 110). Under the new regime a house-property loss cannot be set off against other heads at all (section 202(2)(b)), so the saving shown here assumes you are taxed under the old regime; the interest itself still cancels the rent.
The calculator applies the 30% deduction to the annual value after municipal tax, deducts the first year’s interest, and taxes what is left at the rate you enter. Society or maintenance charges you pay are not deductible separately — the 30% allowance stands in for them, which is why the tax view and the cash-flow view differ.
Limitations
- Everything is for the first year, with no rent rises, cost inflation or rate changes. Run it again with the numbers you expect later.
- Capital gains tax on a sale, depreciation (where a country allows it) and any wealth or vacancy tax are not included.
- For India, the annual value is taken as the rent you enter after vacancy. Where the expected market rent is higher than the actual rent, the Act takes the higher figure, so the tax may be more than shown.
- The tax view assumes the old regime, one property, a single owner, and interest deducted in full as for a let property. Joint ownership, a self-occupied part, an under-construction period or the new regime change it — see the home loan tax benefit calculator.
- Interest is charged monthly on the balance (rate ÷ 12); lenders using daily interest differ by small amounts.
Privacy
Everything is calculated in your browser. The prices, rents and loan details you enter are never uploaded or stored.
Frequently asked questions
What is a good rental yield?
It depends on the market: 3%–4% gross is normal in Indian metros, 5%–8% in much of Europe and the United States, more in small towns and for houses in multiple occupation. Compare like with like, and compare the net yield — after vacancy and costs — with what a safe deposit pays before deciding.
What is the difference between rental yield and cap rate?
Both divide income by price, but the cap rate uses net operating income and the price alone, while the net yield here uses NOI over the price plus your purchase costs. The cap rate is how the market prices property; the net yield is what you actually earn on your outlay. Gross yield uses rent before any cost.
What is cash-on-cash return?
The cash left after the loan payments, divided by the cash you put in — the down payment, purchase costs and loan fees. With a large loan it can be far higher or far lower than the yield: a property yielding 5% can return 10% on your own money, or be negative if the rent does not cover the loan.
What does break-even occupancy tell me?
The share of the year the property must be let to cover its costs and the loan. At 105.95% there is no occupancy that pays, so the property needs money from you every year; at 30% there is a lot of room before it loses money.
Is the 30% deduction in India on top of actual repairs?
It replaces them. Section 22(1)(a) allows 30% of the annual value whatever you spend, so repairs, society dues and insurance are not deducted separately. That is why the taxable income can be higher or lower than your real cash profit.
Why is my cash flow negative when the yield looks fine?
Because a loan payment repays principal as well as interest, and the first years are mostly interest. A 5% yield cannot service a 6.5% loan on 80% of the price. The money is not lost — the principal repaid is yours — which is why the first-year total return is shown as well.
Should I include my own time managing the property?
If you do the work yourself, put the letting fee you avoid into the management percentage anyway; otherwise the return looks better than a comparable hands-off investment. Enter 0 only if you really want the owner-managed figure.