Irish Calculators
Property

Rental Yield and Property Cap Rate Calculator

Compare scheduled rent and net operating income with your supplied property value or cost basis. Mortgage payments are excluded from cap rate, so use a cash-flow tool for the effect of borrowing.

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How the calculation works

Rental yield expresses annual rent relative to a supplied property value or acquisition-cost basis. This calculator shows gross yield and a net operating yield or cap rate after vacancy and operating expenses. Both measures use the full property basis rather than just the investor’s deposit.

Gross rental yield = scheduled annual rent / entered value. NOI = occupied rent + other operating income − operating expenses. Cap rate = NOI / entered value.

  1. Calculate gross yield

    Divide scheduled annual rent by the entered property basis and multiply by 100. This headline ratio deliberately ignores vacancy and expenses.

  2. Find net operating income

    Reduce scheduled rent by the vacancy percentage, add other operating income and subtract operating expenses. The resulting annual net operating income can be negative if expenses exceed income.

  3. Express operating income as a rate

    Divide net operating income by the same property basis and multiply by 100. Comparing this result with gross yield reveals the effect of the entered vacancy and expense assumptions.

Worked example: Vacancy and operating cost

Sample inputs demonstrate the method. They are not a forecast or product offer.

The example uses a €100,000 basis and €10,000 scheduled rent, giving 10% gross yield. A 10% vacancy allowance leaves €9,000 rent. After €2,000 operating expenses, net operating income is €7,000 and the cap rate is 7%.

Property value or acquisition cost basis
100000
Annual scheduled rent
10000
Vacancy allowance
10
Other annual operating income
0
Annual operating expenses
2000

Expected result

Gross rental yield
10%
Net operating yield / cap rate
7%
Annual net operating income
€7,000.00
Worked example: Operating loss allowed

Sample inputs demonstrate the method. They are not a forecast or product offer.

Property value or acquisition cost basis
100000
Annual scheduled rent
10000
Vacancy allowance
100
Other annual operating income
0
Annual operating expenses
1000

Expected result

Gross rental yield
10%
Net operating yield / cap rate
-1%

Understanding your result

Gross yield is a quick rent-to-value ratio; net operating yield reflects the operating assumptions supplied. Neither is a forecast of the property’s total return, because changes in value and eventual selling costs are outside the calculation.

Cap rate also differs from cash-on-cash return. A mortgage changes the owner’s cash contributions and cash flow, but its payments are excluded here so the operating measure remains independent of financing.

Questions you might have

Is rental yield the same as cash-on-cash return?

No. Yield uses the full property value or cost; cash-on-cash return uses the investor’s own cash and financing cash flows.

Choosing the right inputs

Property value or acquisition cost basis
Choose the denominator deliberately: current property value and total acquisition cost answer different comparison questions. Use a positive value and keep that basis consistent across properties.
Annual scheduled rent
Enter scheduled annual rent before the vacancy allowance. If your figure already represents rent received after vacancy, avoid reducing it a second time.
Vacancy allowance
Enter the percentage of scheduled rent expected to be lost through vacancy. Other annual operating income is added separately and is not reduced by this percentage.
Annual operating expenses
Enter annual operating expenses. Exclude financing payments, personal income tax, depreciation and capital improvements from this operating-yield calculation.

Common mistakes to avoid

  • Do not use only the deposit as the denominator; that creates a different return measure.
  • Do not subtract mortgage payments in operating expenses and then describe the result as an unlevered cap rate.

Assumptions to check

  • Financing is excluded from cap rate; use rental cash flow for the effect of debt payments.

Sources and method

Read our calculation and testing approach.