Overview

The Rental Yield Calculator analyzes the return on investment for rental properties. It calculates the two most important metrics in real estate investing — total return on investment and capitalization rate (Cap Rate) — to objectively evaluate rental property profitability. The calculator comprehensively factors in purchase price, deposit, monthly rent, acquisition costs, management fees, and vacancy rates to determine the actual investment yield.

Formula

Total ROI = (Annual Net Rental Income ÷ Total Investment) × 100
Cap Rate = (Annual Net Rental Income ÷ Purchase Price) × 100

• Annual Net Rental Income = (Monthly Rent × 12) × (1 - Vacancy Rate) - Annual Management Costs - Annual Maintenance Costs
• Total Investment = Purchase Price + Acquisition Tax + Brokerage Fee + Other Costs - Loan Amount

Example: Purchase price KRW 300M, monthly rent KRW 1M, vacancy rate 5%, annual management cost KRW 2M
Annual Net Rental Income = (1M × 12) × 0.95 - 2M = KRW 9.4M
Cap Rate = 9.4M ÷ 300M × 100 ≈ 3.13%

How to Use

1. 1Enter the purchase price, deposit, and monthly rental income.
2. 2Enter acquisition-related costs such as acquisition tax and brokerage fees, plus monthly management fees.
3. 3Enter the expected vacancy rate (%).
4. 4Click calculate to see total ROI, Cap Rate, and net rental income.

Tips

• ✔Vacancy rates vary by location and property type, so it is safer to apply a conservative 5-10%.
• ✔Cap Rate measures yield against the purchase price without leverage, making it useful for comparing properties.
• ✔Using leverage (loans) increases return on equity, but you must account for interest costs and rate fluctuation risk.
• ✔Accurately estimating ancillary costs such as management fees, maintenance, and property tax is essential for determining actual yields.

FAQ