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Featured for rent-focused questions
Rental yield
Annual rent as a percentage of purchase price, shown before costs (gross) or after entered annual operating costs (net).
MossMeter calculator guide
Rental Yield vs. Cap Rate
Both measures express income as a percentage of a property’s price, but they use different income figures. Rental yield can show gross rent and rent after entered costs; cap rate uses annual net operating income (NOI).
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For NOI-focused questions
Cap rate
Annual net operating income after operating expenses as a percentage of property price.
What each percentage represents
Income measure
This is the key distinction between the two results.
- Rental yield
- Annual rent, before costs for gross yield or after entered costs for net yield.
- Cap rate
- Annual net operating income (NOI) after operating expenses.
Price used
- Rental yield
- Purchase price
- Cap rate
- Property price
Question it answers
- Rental yield
- How does annual rent compare with the purchase price, before or after the costs entered?
- Cap rate
- How does annual NOI compare with the property price?
Formulas and required inputs
Gross rental yield formula
- Rental yield
- (monthly rent × 12 ÷ purchase price) × 100
- Cap rate
- Not used for cap rate
Net rental yield formula
- Rental yield
- ((monthly rent × 12 − annual operating costs) ÷ purchase price) × 100
- Cap rate
- Not used for cap rate
Cap rate formula
- Rental yield
- Not used for rental yield
- Cap rate
- (annual NOI ÷ property price) × 100
Required inputs
- Rental yield
- Purchase price, monthly rent and annual operating costs
- Cap rate
- Property price and annual NOI
Detailed breakdown
How the calculations differ
| Comparison | Rental yield | Cap rate |
|---|---|---|
| What each percentage represents | ||
| Income measureThis is the key distinction between the two results. | Annual rent, before costs for gross yield or after entered costs for net yield. | Annual net operating income (NOI) after operating expenses. |
| Price used | Purchase price | Property price |
| Question it answers | How does annual rent compare with the purchase price, before or after the costs entered? | How does annual NOI compare with the property price? |
| Formulas and required inputs | ||
| Gross rental yield formula | (monthly rent × 12 ÷ purchase price) × 100 | Not used for cap rate |
| Net rental yield formula | ((monthly rent × 12 − annual operating costs) ÷ purchase price) × 100 | Not used for cap rate |
| Cap rate formula | Not used for rental yield | (annual NOI ÷ property price) × 100 |
| Required inputs | Purchase price, monthly rent and annual operating costs | Property price and annual NOI |
Choose the calculator for your question
Use rental yield for gross or net rent relative to purchase price, and cap rate for annual NOI relative to property price.