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Gross Rental Yield Calculator (For Quick Checking of Rental Potential)

Last Updated on by Jay Castillo | Filed under: - 3 Comments

This is our very own gross rental yield calculator, which will help you compare the rent and the selling price of a target rental property. This is a quick way to see if a property has possibly good returns/earning potential, as compared to the selling price (or if it’s too expensive and has low returns). Check it out below.


Gross rental yield calculator

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How to use

To calculate for the gross rental yield, just enter the values in the fields for data input:

  • Monthly Rent – This is the monthly rent for your target property in Philippine Peso (PHP)
  • Selling Price – This is the selling price of the property you want to buy in Philippine Peso (PHP)

Explanation of calculated results

After entering the values, the following are automatically calculated and displayed:

  • Monthly Gross Rental Yield – This is the calculated monthly gross rental yield, which compares the monthly rent to the selling price, as a percentage. Can also be referred to as the monthly gross return on investment of a rental property.
  • Annual Gross Rental Yield – This is the calculated annual gross rental yield, which compares the annual rent to the selling price, as a percentage. The annual rent is simply the monthly rent multiplied by 12 months/year. The annual yield is also equal to the monthly yield multiplied by 12. Can also be referred to as the annual gross return on investment of a target rental property.

What returns to aim for

I was asked about this several times when I asked for feedback about this calculator, and my opinions are as follows:

  • It depends on the average returns in your target location. For me, anything significantly above average is worth looking into. “Significant” depends on you. In my case, anything approaching 1% per month or 12% per year is significant.
  • In the US, they use the 1% or 2% rule (refers to monthly gross return). I believe the 1% rule is more applicable here in the Philippines, which is based on my observations, so far (during the past 6 years or so in our target locations). However, as Brandon Turner of BiggerPockets.com would always say, these are not really rules. It’s just a “rule of thumb”, and I agree.

So just because a target property has high rental returns, it does not follow that it is already a good deal that you should buy. As usual, you should do a reasonable amount of due diligence, and continue with your analysis. Refer to the disclaimer and the recommended article below.


Disclaimer

The results you will get above are only for quick analysis. This aims to help you avoid wasting time with those properties that are obviously too expensive to buy to give good returns as a rental. Of course, you will also see those that have good gross returns that deserve more thorough analysis.

Again, this calculator only computes for the GROSS rental yield/return on investment where vacancy rates, property management, taxes, maintenance, loan payments (if any) and other applicable expenses, are NOT YET considered. To take this further, you should check/estimate the NET returns.

Recommended reading

To estimate the possible NET returns of a rental property, please refer to the following article:

As always, our standard site disclaimer applies.

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Did you find this calculator helpful? Any suggestions? Let me know by leaving a comment below. Thanks!




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