The short answer
Gross rental yield is a year's rent divided by the price of the home, shown as a percentage. A home bought for $300,000 that rents for $1,500 a month earns $18,000 a year, a gross yield of 6.0%. Net rental yield first subtracts the costs of owning and letting the home: vacancy, management, maintenance, insurance, property tax and any HOA fees.
Across the 8,421 US ZIP codes with rent data in CITIZEN, the typical gross yield is 5.6%, with one in ten below 3.6% and one in ten above 8.7%. Among large metros, yields are highest in lower-priced places such as Akron, Columbia and El Paso, at around 8%, and lowest in California and Utah, down to 3.2% in San Jose. Every market figure here comes from CITIZEN, with data through August 2026; the worked examples are hypothetical.
How to calculate gross rental yield
The formula is short:
Gross rental yield = monthly rent × 12 ÷ price × 100
- Rent is the market rent for a full year: what comparable homes nearby actually achieve, not the most optimistic asking rent.
- Price is what you would pay, or the current market value if you already own the home. The yield on a price paid years ago flatters it.
Gross yield ignores costs, financing and tax. It is too rough to price a single deal, but it is the quickest fair way to compare many places at once, because rent and price are available almost everywhere.
Net rental yield: what is left after costs
Net yield is the income left after the costs of owning and letting the home, divided by the same price.
Net rental yield = (annual rent − vacancy − operating costs) ÷ price × 100
- Vacancy. Weeks between tenants, plus rent owed and never paid.
- Management. A manager's fee, usually a share of the rent, or a fair value for your own time.
- Maintenance and repairs. Routine upkeep plus a reserve for large items such as a roof.
- Insurance. Landlord cover for the building and for liability.
- Property tax. Set locally, and very different from one county to the next.
- HOA fees. Association dues for condos and many planned communities.
Net yield is measured before mortgage payments and income tax, so it describes the property rather than its financing; calculated this way, it is close to what commercial investors call a cap rate. Some investors also add closing costs to the price. Either convention works, as long as you use it everywhere.
A worked example
A hypothetical home costs $320,000 and rents for $2,000 a month. The costs are assumptions for illustration, not typical figures for any particular place.
| Line | Per year | Assumption |
|---|---|---|
| Rent | $24,000 | $2,000 a month for 12 months |
| Vacancy | −$1,200 | 5% of rent |
| Management | −$1,920 | 8% of rent |
| Maintenance and repairs | −$2,400 | 0.75% of the price |
| Insurance | −$1,500 | Flat estimate |
| Property tax | −$3,200 | 1% of the price |
| HOA fees | −$600 | $50 a month |
| Net operating income | $13,180 | Rent less all costs |
The gross yield is $24,000 ÷ $320,000 = 7.5%. The net yield is $13,180 ÷ $320,000 = 4.1%. Costs took about 45% of the rent.
The gap depends on place: the same home in a county with twice the property tax would net about 3.1%. Small assumptions matter too: every extra month of vacancy here costs $2,000, or about 0.6 points of yield.
Why high yields come with lower prices
Rents vary across the country much less than prices do. A home worth four times as much as another rarely rents for four times as much, so as prices rise, yields fall. In CITIZEN's data:
- Homes typically valued under $200,000: a typical gross yield of 9.7%, across 925 ZIP codes.
- Homes typically valued over $750,000: a typical gross yield of 3.5%, across 1,231 ZIP codes.
That does not make cheap areas better investments. Yield is only the income half of a return; the other half is what happens to the price. Buyers accept 3.5% in expensive areas because they expect the price, and the rent, to grow. High-yield areas are usually lower priced for a reason: slower price growth, older housing, weaker local incomes or fewer people arriving. And many costs, such as turnover between tenants or a new water heater, cost about the same whatever the home is worth, so they take a bigger share of a smaller rent.
Where rental yields are highest and lowest
Among the 100 largest US metros, these are the highest and lowest typical gross yields in CITIZEN's August 2026 data:
| Highest yields | Typical gross yield | Lowest yields | Typical gross yield |
|---|---|---|---|
| Akron, OH | 8.0% | San Jose, CA | 3.2% |
| Columbia, SC | 8.0% | San Francisco, CA | 3.5% |
| El Paso, TX | 7.9% | Los Angeles, CA | 3.5% |
| Cleveland, OH | 7.8% | San Diego, CA | 3.7% |
| Birmingham, AL | 7.8% | Salt Lake City, UT | 3.7% |
| Augusta, GA | 7.7% | Provo, UT | 3.9% |
The high-yield list is made up of lower-priced metros in Ohio, the South and West Texas; the low-yield list is entirely California and Utah, where prices are high relative to rents. A typical home in Akron earns 2.5 times the gross yield of a typical home in San Jose.
For context, the typical monthly rent in CITIZEN's data is $1,824, the typical rent change over 12 months is +2.5%, and the typical rent-to-income ratio is 26.5%. Metro figures still average very different neighborhoods. The free housing market reports break each of the 100 largest metros down by ZIP code, which is where the best rental yield ZIP codes for a given strategy show up.
Why yield alone misleads
- It is a snapshot. If the example home's price rose 10% in a year while its rent rose 2.5%, a buyer at the new price would get about 7.0% instead of 7.5%. Over a long hold, a lower yield on a steadily rising rent can earn more than a higher yield on a rent that stalls.
- Vacancy is not in the headline. Gross yield assumes twelve months of rent; areas with weak demand lose more of the year between tenants.
- Seasonal rents distort it. Holiday towns report rents that apply for only part of the year. Read as year-round figures, rents in Sag Harbor, Southampton or East Hampton would produce yields no landlord could earn. CITIZEN screens such seasonal rents out of its yields.
- Rent can only rise as far as incomes allow. A widely used rule of thumb treats rent above 30% of income as a burden. Where rent already strains local incomes, a high yield has little room to grow.
- Costs differ by place. Equal gross yields can hide very different net yields once property tax, insurance and HOA dues are counted.
How to compare yields across places
- Use one definition. The same rent measure and price basis, gross against gross or net against net.
- Place each yield on the national scale. With a typical 5.6% and only one ZIP code in ten above 8.7%, a 9% gross yield needs an explanation; 3.5% is normal for an expensive area.
- Convert to net with local costs. Use each place's property tax, insurance and HOA dues, not one national assumption.
- Add the price trend. Income plus price change is the total return.
- Check rent direction and affordability. Prefer rents that have kept pace with prices and sit comfortably within local incomes.
- Screen out outliers, then verify. Seasonal markets and thin data produce yields that look precise and are not. The yield narrows the search; the street and the rent a home can really achieve still have to be checked on the ground.
Yield is one of six measures worth reading together; the guide to how to analyze a housing market sets out the full method.
How CITIZEN does it
CITIZEN: every US ZIP code, graded on one scale
CITIZEN reads the housing market of every US ZIP code: price and its direction, rent, local earnings, resident equity, and where buyers and their money are arriving from. It is built for the buyer who would rather be paid while waiting to be proved right, and who wants to know which streets in America do that best.
Every ZIP code is graded on one national scale, so a ZIP code in Ohio and one in California can be compared directly. Grades are ranks against the whole country, refreshed every month: an A is the top 10% of US ZIP codes, an F the bottom 10%. For systems that need the read programmatically, CITIZEN API returns it for any geography from metro down to ZIP code.
Questions
What is a good rental yield?
It depends on the strategy and on how expensive the area is. Across the 8,421 US ZIP codes with rent data in CITIZEN, the typical gross yield is 5.6%, with one in ten below 3.6% and one in ten above 8.7%.
How do you calculate rental yield?
Multiply the monthly rent by 12, divide by the price of the home and multiply by 100. A home costing $300,000 that rents for $1,500 a month has a gross rental yield of 6.0%.
What is the difference between gross and net rental yield?
Gross yield uses the full year's rent. Net yield first subtracts vacancy, management, maintenance, insurance, property tax and HOA fees, so it is always lower, often by a wide margin.
Where are rental yields highest in the US?
Among the 100 largest metros, CITIZEN's August 2026 data puts the highest typical gross yields in Akron and Columbia, South Carolina, at 8.0%, followed by El Paso at 7.9%. The lowest is San Jose at 3.2%.
Is a higher rental yield always better?
No. High yields often come with lower prices, slower price growth and costs that take a larger share of the rent, while low-yield areas are usually priced for growth. Compare the total return, income plus price change, after costs.
