Gross Yield vs Net Yield — The Real Difference
Most landlords compare properties using gross yield. This gross yield vs net yield comparison shows why that number overstates actual returns by $3,500-4,200 per year on a median US rental.
Calculate both yields on your property. Enter an address and see gross vs net yield side by side.
Calculate your gross and net yield Free preview • No credit card requiredSide-by-Side: $200,000 Property Example
A typical US rental — $200,000 purchase price, $1,500/month rent:
| Metric | Gross Yield | Net Yield |
|---|---|---|
| Formula | Annual Rent ÷ Price | (Rent − Expenses) ÷ Price |
| Annual Income | $18,000 | $10,160 |
| Yield Percentage | 9.0% | 5.1% |
| Monthly Income | $1,500 | $847 |
| Expenses Included | None | Tax, insurance, management, maintenance, vacancy, CapEx |
| Best For | Quick screening | Investment decisions |
The 3.9 percentage point gap equals $7,840/year in expected vs actual income.
Where Gross Yield Wins
Gross yield has one legitimate use: fast screening. When comparing 20 potential properties, gross yield eliminates non-starters in seconds.
- Rule of thumb: Properties below 6% gross yield rarely produce above 4% net yield
- Speed: Gross yield requires only two numbers — rent and price
- Comparison: Useful for comparing markets when expense data is unavailable
Where Net Yield Wins
Net yield is the metric that actually predicts what arrives in your bank account.
- Investment decisions: Compare net yield against your 5.5% minimum threshold
- Mortgage qualification: Lenders use net rental income, not gross
- Tax reporting: The IRS Schedule E requires expense reporting — net yield is the legally relevant metric
- Accurate comparison: Accounts for differences in tax rates, insurance costs, and management fees between markets
The NAA reports that landlords who decide based on gross yield overestimate their annual income by an average of $4,200. In any gross yield vs net yield comparison, the net figure reveals what you actually keep.
Read the full breakdown in our blog: Gross Yield vs Net Yield: The $4,200/Year Difference.
"I was comparing properties based on gross yield and couldn't understand why my actual returns fell short. PIE's gross yield vs net yield comparison showed me exactly what I was missing."