What is a good rental yield? Benchmarks and three tests

“What is a good rental yield?” has no single answer, because a yield is only good or bad compared with something: the market you buy in, the cost of the loan, and what the same money would earn with no tenants and no repairs. This guide gives the reference points, then the three comparisons that decide whether a yield is good for you.

Gross or net: know which one you are looking at

Gross yield is a year’s rent divided by the price. Net yield first takes off what the property costs to run: vacancy, management, repairs, insurance and property taxes. Listings and market statistics quote gross yields, but net yield is what you actually earn, so compare like with like. The difference is explained in gross vs. net rental yield.

Typical gross yields by country

Global Property Guide, which compares median asking rents with median asking prices in major cities, puts the average gross rental yield at about 6.71% in the United States (second quarter of 2026), 6.98% in the United Kingdom (fourth quarter of 2025), 5.43% in Spain (third quarter of 2025), 4.83% in France (second quarter of 2026) and 4.34% in Japan (third quarter of 2025).

Inside each country, the spread is wide. Expensive city centres usually yield less, because prices have risen faster than rents; cheaper towns yield more. A yield well above the local average is not automatically a bargain: it often reflects a weaker rental market, an older building that needs work, or slower expected price growth.

Three tests for your own yield

Against the local average. A yield in line with similar homes nearby tells you the price is roughly fair for the rent. Far above it, look for the reason before celebrating.

Against the cost of the loan. If you borrow, a net yield above the mortgage rate means each borrowed unit earns more than it costs, and the loan raises your return on the cash you put in. Below the mortgage rate, borrowing lowers it, and the cash flow can turn negative.

Against a safe return. A rental property is work and risk. If its net yield is not clearly above what a savings account, a deposit or a short-term government bill pays, the case rests entirely on the price going up.

A worked example

A $300,000 home rented at $2,000 a month brings in $24,000 a year: a gross yield of 8%. If vacancy, management, repairs, insurance and taxes take 35% of the rent, $15,600 is left, a net yield of 5.2%.

Bought with 25% down and a 30-year mortgage at 6.5%, the loan costs about $17,066 a year, more than the net rent, so the property loses about $1,466 a year in cash: a cash-on-cash return of −1.95%, before purchase costs. At a 4.5% mortgage rate, the same home would bring in about $1,919 a year, or 2.56% on the cash invested. The yield did not change; the comparison did.

Run your own numbers

The rental yield calculator gives the gross and net yield of a property, and the property investment calculator adds the loan, the cash flow and the return over the years you hold it. To see what a safe alternative pays, the APY calculator turns any savings rate into its annual yield.