"Yield" is the annual rent a property generates, expressed as a percentage of its price. It's the simplest way to compare a duplex in Cleveland to a condo in Austin without getting tangled in absolute dollar figures. But there are two different yields in common use, and confusing them is how investors end up shocked when a "10% yield" delivers a 4% return.
Gross rental yield
Gross yield = Annual rent ÷ Purchase price × 100
A $250,000 single-family rental that brings in $1,800/month has $21,600 in annual rent — a gross yield of 8.6%. Gross yield is fast to compute and useful for first-pass screening. It's what you see on most listing-aggregator dashboards. It's also what you should never make an investment decision on, because it ignores every cost of ownership.
Net rental yield
Net yield = (Annual rent − Annual costs) ÷ Purchase price × 100
Net yield subtracts the actual costs of holding the property: property tax, insurance, management, maintenance, vacancy, HOA, and capex reserves. On the same $250,000 property:
- Annual rent: $21,600
- Property tax (1.2% of value): $3,000
- Insurance: $1,400
- Property management (8%): $1,728
- Maintenance + capex (10% of rent): $2,160
- Vacancy (6%): $1,296
- Net annual cash before debt: $12,016
- Net yield: 4.8%
That gross-to-net gap — 8.6% to 4.8% — is typical. Half of gross yield disappears into the cost of ownership. Anyone advertising "10% yield" on a U.S. residential rental is quoting gross. Always clarify.
Typical U.S. rental yields in 2026
From recent transaction data and rental indices, gross / net yields by market type:
- High-cost coastal (San Francisco, NYC, Boston): gross 4%–5%, net 1.5%–2.5%
- Mid-cost growth markets (Austin, Nashville, Phoenix): gross 5%–7%, net 3%–4.5%
- Affordable Midwest (Cleveland, Indianapolis, Memphis): gross 8%–12%, net 4.5%–6.5%
- Distressed / tertiary: advertised gross 12%+, but net often 3% or negative after honest expenses
The yield trap
Cheap properties advertise eye-catching gross yields. They also tend to come with: harder-to-screen tenants, longer vacancies, repair costs that consume a larger fraction of cheaper rents, lower appreciation, and softer resale liquidity. A $60,000 house with $750 rent is a 15% gross yield on paper. After a $4,000 turnover, a $3,500 roof repair, and 2 months vacant, you're at break-even for the year.
Yield vs total return
Yield is income. Total return = yield + appreciation. In a market where prices are rising 3%–5% a year, a 4% net yield + 4% appreciation = 8% unlevered return. In a flat market with 6% net yield, you're still at 6%. Don't optimize for yield in isolation if you have a long holding horizon.
Use the calculator
Our rental yield calculator shows both gross and net yield side by side, with realistic expense defaults you can override. It's the single fastest way to decide whether a listing is worth a deeper underwrite.