Translation unavailable - this article is shown in English. View English version
Summary
Rental yield measures the annual return from renting out a property, expressed as a percentage of its value. US investors use both gross yield (rent / price) and cap rate (net operating income / price), which is equivalent to net yield. Average US gross rental yields range from 4-8% depending on market, with Midwest and Southern cities generally offering higher yields than coastal metros.
How it works
Gross yield vs cap rate (net yield)
Gross Yield (%) = (Annual Rent / Property Price) x 100
Cap Rate (%) = (Annual Rent - Operating Expenses) / Property Price x 100
The cap rate (capitalization rate) is the standard US metric for investment property, equivalent to net yield. It excludes mortgage costs and focuses on the property’s income-generating ability.
US-specific operating expenses
| Expense | Typical range | Notes |
|---|---|---|
| Property taxes | 0.5-2.5% of value | Varies dramatically by state (TX ~1.8%, NJ ~2.2%, HI ~0.3%) |
| Property management | 8-12% of rent | Full service; self-management saves this cost |
| Insurance | $1,200-$3,000/year | Homeowners + landlord liability; flood zones add $700-$2,000 |
| Maintenance | 1% of property value | Rule of thumb; older properties may need more |
| Vacancy | 5-10% of annual rent | National average ~6%; varies by market |
| HOA fees | $0-$500/month | Condos and planned communities only |
Property taxes are the largest US-specific expense and vary by orders of magnitude across states. A $400,000 home might have $1,200/year in property tax in Hawaii but $8,800 in New Jersey.
Tax benefits for US landlords
The IRS allows landlords to depreciate residential property over 27.5 years (IRS Publication 527), creating a non-cash deduction. On a $396,800 property (excluding land value of ~25%), the annual depreciation deduction would be approximately $10,822, which can offset rental income for tax purposes.
Worked example
$396,800 property, $2,200/month rent, 20% down:
- Annual rent: $2,200 x 12 = $26,400
- Gross yield: ($26,400 / $396,800) x 100 = 6.65%
- Property tax (1.1%): $396,800 x 0.011 = $4,365
- Management (10%): $26,400 x 0.10 = $2,640
- Insurance: $1,800
- Maintenance (1%): $3,968
- Vacancy (6%): $26,400 x 0.06 = $1,584
- Total expenses: $4,365 + $2,640 + $1,800 + $3,968 + $1,584 = $14,357
- Net operating income: $26,400 - $14,357 = $12,043
- Cap rate: ($12,043 / $396,800) x 100 = 3.03%
Key differences from other markets
- Property taxes are a major operating cost in the US (averaging 1.1% of value annually), with no equivalent in the UK where council tax is paid by tenants. This significantly reduces net yields compared to UK buy-to-let.
- Depreciation deductions (27.5-year schedule) give US landlords a tax benefit that does not exist in the UK or Australia in the same form. Australian investors use negative gearing, while UK landlords lost mortgage interest relief in 2020.
स्रोत
Related calculators
Mortgage
Calculate your US monthly mortgage payment. Average 30-year fixed rate: 5.98% (Feb 2026). Compare loan options.
CD & Savings
Calculate returns on US CDs and savings accounts. Average savings rate: 0.39% (Feb 2026). Compare bank rates.
Amortization Table
See your US mortgage payment schedule month by month. Principal, interest, and balance at 5.98% average rate (Feb 2026).
Rental Yield
Calculate gross and net rental yield, annual profit, monthly cash flow, and ROI vs deposit for your buy-to-let property. Compare to index fund returns.
Rental Yield
Calculate rental yield on Australian property. Average house price: A$1,045,400 (Feb 2026). Gross and net yield with ROI.