Learn to interpret your results
Gross and net rental yield are not cash flow
Published on
A property can have a positive operating yield while requiring extra cash each month. Separate the asset, its financing and available cash to understand why. An attractive percentage alone does not describe risk or costs you have omitted.
Income you actually expect to collect
The engine defines yearly gross income as monthly rent × occupied months. With eleven occupied months, the vacant month already reduces income; do not deduct it again as a vacancy expense. Distinguish advertised rent from collected rent, and represent arrears or gaps between tenants with justified occupancy assumptions or cost entries, without duplication.
Three measures, different denominators
Simuily shows gross yield = collected rent / purchase price × 100. Operating income is rent less entered yearly expenses. Net operating yield divides that result by price plus initial costs; it neither deducts mortgage payments nor includes appreciation. Cash yield divides cash after debt payments by initial equity. Check definitions before comparing listings.
Financing changes cash flow
A loan payment contains interest and principal repayment. Both leave your account, but only interest is a financing cost; principal reduces debt. In the example, positive operating income does not cover yearly loan payments, so cash flow is negative. Do not treat repaid principal as an operating expense or cash flow as total investment return.
Budget for omitted costs
Enter maintenance, insurance, management, property charges and taxes using your own figures. Tax and contractual obligations vary by location; the model does not calculate personal taxes or sale profits. Test lower occupancy and more repairs. Future works, sale costs and interest changes need additional analysis rather than a supposedly guaranteed yield.
Hypothetical example, not a forecast
The amounts are invented examples. They are not current prices or personalised recommendations.
Example inputs
| Purchase price | $200,000 |
|---|---|
| Total upfront costs | $15,000 |
| Monthly rent | $900 |
| Rented months per year | 11 |
| Optional loan principal | $140,000 |
| Fixed nominal annual interest | 3 % |
| Loan term | 20 |
| Annual building fees | $600 |
| Annual maintenance | $600 |
| Annual insurance | $300 |
| Manual annual property taxes | $300 |
| Annual management | $0 |
| Other annual expenses | $0 |
Approximate results
| Gross annual income | $9,900 |
|---|---|
| Annual operating expenses | $1,800 |
| Net operating income | $8,100 |
| Annual debt service | $9,317.24 |
| Annual cash flow after debt | $-1,217.24 |
| Gross yield on purchase price | 4.95 % |
| Net operating yield | 3.77 % |
A common question
Does positive net yield guarantee positive cash flow?
No. Loan payments and other outflows can exceed operating income. Check both measures and their denominators.
Try these inputs and compare different assumptions in the calculator.