What Is a Good Rental Yield? A Complete Investor's Guide for 2026
Rental yield is the most important metric for property investors — yet most people confuse gross yield with net yield. Here's everything you need to know to evaluate any rental property correctly.
What Is Rental Yield?
Rental yield measures the annual return on a property investment as a percentage of the property value. It tells you how hard your money is working as a landlord.
Net Yield = ((Annual Rent - Annual Expenses) ÷ Property Value) × 100
Gross Yield vs Net Yield — What's the Difference?
This distinction is critical. Many investors are misled by gross yield figures and discover the reality only after buying.
| Metric | What It Includes | When to Use |
|---|---|---|
| Gross Yield | Rent only, no expenses | Quick initial comparison |
| Net Yield | Rent minus all costs | Real profitability analysis |
| Cash-on-Cash Return | Net income vs cash invested | Leveraged investments |
What Is a Good Rental Yield in 2026?
Under 3%: Poor — capital growth play only | 3–5%: Fair — typical for major cities | 5–7%: Good — solid income investment | 7–10%: Excellent — strong cash flow | 10%+: Very high — often signals higher risk
Real Example: $300,000 Property
Let's analyze a $300,000 rental property with $1,800/month rent:
- Gross yield: ($21,600 ÷ $300,000) × 100 = 7.2%
- Management fee (8%): −$1,728
- Insurance: −$1,200
- Maintenance: −$1,500
- Property tax: −$3,000
- Vacancy (2 weeks): −$692
- Net yield: ($13,480 ÷ $300,000) × 100 = 4.5%
Notice how expenses reduced the yield from 7.2% to 4.5%. This is why gross yield alone is misleading.
Cash-on-Cash Return: The Investor's Real Metric
If you put down $60,000 (20%) and earn $13,480 net per year, your cash-on-cash return is 22.5% — much more relevant for leveraged investors.
Markets With Strong Rental Yields in 2026
| Market Type | Typical Gross Yield | Typical Net Yield |
|---|---|---|
| Major US cities (NYC, SF) | 3–4% | 1.5–2.5% |
| Mid-tier US cities | 6–9% | 4–6% |
| UK London | 3–5% | 2–3.5% |
| UK regional cities | 5–8% | 3.5–5.5% |
| Emerging markets | 8–15% | 5–10% |
Calculate Your Rental Yield Instantly
Enter your property details and get gross yield, net yield, cash flow, and payback period in seconds.
Try the Rental Yield Calculator →Key Takeaways
- Always calculate net yield — gross yield overstates returns by 30–50%
- 5%+ net yield is generally the minimum for a viable income investment
- Cash-on-cash return matters more than yield if you're using a mortgage
- Factor in vacancy (typically 2–4 weeks/year) and maintenance (1% of value/year)
- High yield often means higher risk — always research the local market