real estateIntermediate
Rental Property ROI: How to Calculate Real Returns
How to calculate gross, net and after-tax returns on a rental property. Formulas, worked examples and pitfalls to avoid.
real estate10 min read
Free calculator
Calculate the rental yield of a property
Gross, net of charges, net of tax, and what is left each month once the loan is paid. Unfurnished rental under French tax rules, micro-foncier or réel. Your figures never leave your browser.
The rate of the last bracket of your French income tax — on your tax notice
Your figures are never sent: the calculation runs on your device. Only an anonymous audience measure (page view, click) is recorded, without any figure.
Enter a price and a rent to see the yield.
The guide
How to calculate the yield of a rental investment
Rental yield answers a simple question: how much does the money tied up in a rented property earn each year? It is expressed as a percentage of the total cost — price, acquisition costs, renovation — and comes in three levels, from the most flattering to the most honest. Our article on the return of a rental investment goes through each with an example.
Gross yield divides annual rent by total cost. It is the figure in listings, and it says almost nothing: it ignores property tax, building charges, insurance, vacancy and tax. Net yield removes everything you pay for the property. Net-of-tax yield also removes income tax and social levies — the only one you can compare with a savings account or a euro fund.
Then comes the question yield does not ask: how much leaves your pocket each month? With a loan, a property can be profitable and cost €150 a month for twenty years. That is the cash flow, and the calculator shows it next to the yield, because it decides whether the project is sustainable.
The four steps of the calculation
Count the total cost, not the price
Purchase price, notary fees (around 7.5% for an existing property in France, 2 to 3% for new builds), agency fees, renovation. A yield computed on the price alone is overstated by half a point or more.
Remove the charges the tenant does not pay
Property tax, non-recoverable building charges, landlord insurance, property management. And a provision for vacancy: two weeks a year is prudent, more in a small town.
Pick the tax regime that costs the least
For an unfurnished rental under €15,000 of annual rent, you choose between micro-foncier (30% flat allowance, nothing else deductible) and réel (charges and loan interest deductible). Réel wins as soon as charges and interest exceed 30% of rent — almost always with a loan.
Look at the cash flow before deciding
Rent minus charges, minus tax, minus the loan payment. If negative, it is the monthly savings effort you accept to build wealth; it must fit your budget without depending on the tenant.
Yield is computed before buying and checked after, every year. To go further, simulate a rental purchase in detail — regimes, deficit, resale — and learn to track the value of a property once bought.
This yield will move every year
Rents revalued, charges rising, a loan amortising: the real yield shows over time. With a free account you track each property, its rents collected and its charges. The full rental module — regimes, French 2044 return, deficits — is in Premium. The demo shows the app with sample data.
Further reading
Frequently asked questions
It depends on the city and the risk. Gross, 3 to 4% in large French cities, 6 to 8% in mid-sized towns. What matters is the net-of-tax yield and the cash flow: a 7% gross with 4 weeks of vacancy and works every three years earns less than a 4% rented without interruption.
Micro-foncier applies a flat 30% allowance on rent; réel deducts actual charges and loan interest. The calculator compares both and keeps the one with the lowest tax in year one. Note that opting for réel commits you for three years.
Furnished rentals fall under BIC rules, with a 50% allowance in micro and depreciation of the property under réel: taxation is often lighter, but the calculation differs. This calculator only covers unfurnished rentals; Patrice's rental module covers furnished ones.
Because the loan payment also repays capital, which is not a cost but forced savings. A negative cash flow means you top up each month to finance a property that will be yours. The question is whether that effort fits your budget.
No. The calculation runs in your browser and your figures disappear when you close the tab. We only measure, anonymously, that the page was viewed and a calculation was made — never the amounts. To keep your figures and track the property, you need an account.