Real Estate ROI Calculator: Rental Yield, Returns and CAGR

Rental yield is the rent a property earns in a year, expressed as a percentage of its price. Gross rental yield equals monthly rent multiplied by 12, divided by the property price, multiplied by 100. On the example this page opens with, rent of ₹35,000 a month on a ₹1,00,00,000 property gives a gross yield of 4.2 percent. Yield is the quickest way to compare the income side of two properties of different prices.

Gross yield uses the rent before any costs. Net yield deducts the running costs of holding the property, such as maintenance, property tax and society charges, from the yearly rent before dividing by the price. Net yield is always lower and closer to what the owner actually keeps. This calculator shows gross yield as the headline figure, and uses net rent, after your yearly cost figure, in the total rent and ROI numbers.

CAGR is the compound annual growth rate: the single yearly rate at which a starting amount would have to grow, compounding every year, to reach an ending amount. It is calculated as (ending amount divided by starting amount) raised to the power of (1 divided by years), minus 1. In this calculator the ending amount is the final property value plus the total net rent collected, and the starting amount is the purchase price, so the CAGR covers both income and appreciation.

Yes. The total gain in this calculator is the increase in the property's value over the holding period plus the total net rent collected in the same period. Overall ROI is that total gain divided by the purchase price, multiplied by 100. If you want rent only, look at the total net rent figure on its own.

Deduct the regular costs of holding the property: maintenance, property tax, society charges, and an allowance for vacancy between tenants and any brokerage paid when re-letting. This calculator has one combined yearly cost field, so add your expected costs for the year into it. One-time purchase costs such as stamp duty and registration are not deducted from rent here; if you want them counted, add them to the purchase price you enter.

Because it compounds. Over five years, a yearly increase of 5 percent changes the total rent only a little. Over twenty years, the later years earn far more rent than the first years, so a small change in the assumed increase moves the total rent, and with it the overall ROI, by a large amount. Run the calculator once with a cautious increase and once with an optimistic one, and base any decision on the cautious result.