Rental Yield, Cap Rate, Cash-on-Cash and DSCR Explained

Use this calculator if...

The property yield calculator is best for focused metric checks.

• You want quick rental yield Use it when you want gross yield, net yield or cap rate from rent, value and expenses.
• You are comparing rent and price It is useful for a first pass before building a full rental cash-flow scenario.
• You need a simple metric check Use it to understand metric direction, not to decide whether a property is suitable.

Input assumptions explained

These assumptions decide which metric is being measured and how broad it is.

• Annual rent Gross yield starts with rent before vacancy, management and operating expenses.
• Property value or purchase price Yield and cap-rate calculations divide income by the value or price assumption entered.
• Operating expenses Expenses such as insurance, rates, maintenance and management lower net operating income.
• Vacancy Vacancy reduces collected rent before fixed costs are considered.
• Upfront cash Cash-on-cash return compares annual cash flow with cash invested, not property value.
• Debt service DSCR compares net operating income with mortgage or loan payments.

Worked example

If a 600,000 rental earns 600 per week, annual rent is about 31,200. Operating expenses then decide how much income remains before financing.

Property value

600,000

Used as the denominator for gross yield and cap rate.

Rent

600 per week

Annual rent is about 31,200.

Gross yield

About 5.2%

Annual rent divided by property value.

Operating expenses

9,000 per year

Subtracted before net operating income.

Net operating income

22,200 per year

Annual rent minus operating expenses.

Cap rate

About 3.7%

NOI divided by property value, before financing.

Financing can still make monthly cash flow negative even when gross yield looks reasonable.

Result interpretation

Read the result as a scenario based on the assumptions entered, not as a decision rule.

Common mistakes

These are common ways an estimate can become cleaner than the real-world scenario.

• Calling gross yield cash flow Gross yield does not include expenses, debt payments, vacancy or tax.
• Mixing cap rate and cash-on-cash return Cap rate uses property value. Cash-on-cash return uses upfront cash invested.
• Ignoring vacancy and maintenance Both can materially change NOI and every metric based on NOI.
• Using DSCR as a universal rule DSCR is a coverage ratio. It does not capture every lender rule, local cost or investment risk.

Related calculators

Use these calculators when you need full cash flow, break-even rent or a BRRRR-specific view.

What to try next

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