Enter a property's price and the monthly rent to see its gross and net rental yield. A quick way to sanity-check any buy-to-let or overseas property before you dig deeper.
Illustrative only. Actual returns depend on the development, occupancy, costs, financing and market conditions. Property investment carries risk; capital is at risk and returns are not guaranteed.
Gross yield is arithmetic anyone can do in their head: annual rent divided by price. (Monthly rent × 12) ÷ price × 100. It is the number that appears in listings, in brochures and in almost every conversation about overseas property, and it describes money that passes through your account rather than money that stays in it.
Net yield subtracts the cost of running the thing. Letting agency or resort management commission, the building's common-area charge, the sinking fund, insurance, repairs, replacing furniture that guests wear out, and the weeks each year when nobody is paying you at all. Only after those come off do you have a figure you can compare against anything else you might have done with the money.
The gap between the two is not a rounding error. On a property let through a resort operator it is routinely a third to nearly half of the gross, which means a headline yield and a real yield can sit a full three percentage points apart. That gap is where most disappointment in overseas property lives, and it is the entire reason this calculator has a third field.
Assume a purchase price of £200,000 and rent of £1,200 a month. These are the calculator's default values, and they are deliberately round.
Annual rent: £1,200 × 12 = £14,400.
Gross yield: £14,400 ÷ £200,000 × 100 = 7.2%. This is the number a brochure would print.
Now apply a 30% cost ratio. Costs of £4,320 come off, leaving £10,080 retained. Net yield: 5.04%. The headline has lost more than two points and it has not moved an inch — the property is identical, we have simply stopped ignoring the outgoings.
Change the cost ratio to 45%, which is not unusual once a resort operator's commission and a full-service charge are both in play. Retained income falls to £7,920 and net yield to 3.96%. One input, moved by fifteen points, has cut the return you actually experience by more than a fifth.
One further correction almost every calculator skips. You did not deploy £200,000 — you deployed £200,000 plus acquisition costs. Add an illustrative £12,000 of transfer charges, legal fees and initial building contributions and your capital committed is £212,000. At the 30% cost ratio the honest figure becomes £10,080 ÷ £212,000 = 4.75%, not 7.2%. That is the number to carry into a decision.
Figures are illustrative and rounded for teaching. They are not a forecast, not an offer and not evidence of what any particular property has achieved or will achieve. Rental income is not guaranteed and capital is at risk.
| What eats the gross | Why it applies |
|---|---|
| Management or letting commission | The largest single line on a managed or short-let property. Charged as a percentage of rental income, so it scales with success rather than capping out. |
| Common-area / service charge | Payable whether or not the unit is occupied. Usually billed on floor area, so it is fixed against a variable income. |
| Sinking fund | Contributions towards major building works. Often a one-off on purchase plus a recurring element. |
| Voids | Weeks with no paying occupant. In a seasonal resort market this is structural, not bad luck, and it is the line owners most often set to zero when estimating. |
| Maintenance, furniture, linen | Short-let use consumes soft furnishings on a cycle measured in years, not decades. |
| Insurance and utilities | Small individually; together a real percentage point of gross on a modest unit. |
| Local income tax and withholding | Rental income is taxable where the property sits. Whether you model it inside the cost ratio or outside it, do not model it nowhere. |
Use the price you will actually pay, not the asking price or the pre-discount list figure. If you want the stricter version described above, add acquisition costs into this field and read the output as a return on capital committed rather than a return on purchase price. Both are defensible; mixing them silently is not.
This is where optimism enters. A long-let market gives you twelve roughly equal months. A holiday-let market does not — it gives you a handful of very strong weeks and a long shoulder season, and quoting the peak nightly rate multiplied by 365 produces a number with no relationship to reality. Take a realistic annual total, divide by twelve, and enter that. If a projection has been handed to you, ask what occupancy assumption sits underneath it before you use it.
The field is expressed against rent rather than price on purpose, because the biggest component — management commission — is itself charged against rent. The 30% default is a reasonable starting point for a straightforward managed let. Self-managed long lets can run lower. Full resort management with a rental programme, hospitality-grade servicing and a seasonal occupancy profile runs higher, and 40–50% is not an unusual place for it to land. If you do not know, model two scenarios rather than guessing once.
Yield is an income measure and nothing else. It is silent on capital growth, which for most overseas buyers is the larger half of the outcome and the half nobody can calculate in advance. It is silent on currency: earn in baht and spend in sterling and your realised income moves with the exchange rate regardless of how the property performs. It is silent on liquidity — how long a resale takes in that specific market, and what it costs you to exit.
It also assumes the income arrives. A rental programme's projection is a projection. Where an operator offers a guaranteed return for an initial period, the yield after that period ends is the one that describes the asset, and the guarantee is only ever as good as the entity standing behind it. For overseas property generally, a realistic sustained net figure tends to sit in the mid single digits — in the region of 4–5% — rather than the double-digit headlines that circulate in marketing material. That is a broad expectation, not a promise, and any individual property can do better or considerably worse.
There is no universal threshold, because yield compensates you for risk and illiquidity as much as for anything else — a higher figure in a thinner market is not automatically better value. The more useful test is whether a realistic net figure, after every cost and after tax, beats what the same capital would earn elsewhere by enough to justify owning an asset you cannot sell in a week. For overseas resort property that comparison usually happens in the mid single digits.
Be consistent and state which you are doing. Pre-tax net yield compares properties cleanly, since tax depends on your personal position rather than the building's. Post-tax tells you what actually reaches you. Problems start when a comparison mixes a pre-tax figure for one property with a post-tax figure for another. UK residents are generally taxable on overseas rental income as well as locally — the mechanics are on GOV.UK, and because rates shift at each Budget it is worth reading there rather than trusting a printed number.
Because the dominant cost on a managed property is commission, which is itself a percentage of rent. Expressing the whole cost base the same way keeps the model coherent when you flex the rent, and it makes the sensitivity obvious: move the ratio ten points and watch what happens to net yield.
Not on its own. Yield is one of three components, alongside capital growth and the cost of getting out, and markets frequently trade one against another — the highest income is often found where growth expectations or liquidity are weakest. A property with a lower yield and a deeper resale market can be the better holding. Capital is at risk in either case and returns are not guaranteed.
Want the real, net numbers for a specific Phuket property?
See if you qualify →A calculator only answers the question you ask it. See every other cost that sits between a gross yield and the money you actually keep.