What is Gross Rent Yield?
Gross rent yield is annual gross rent divided by the property's purchase price (or current value), expressed as a percentage. It ignores operating expenses and is used as a quick first-pass screening metric. A 6% gross yield is roughly the floor for a viable rental in most US markets in 2026.
Gross rent yield is the back-of-napkin number investors use to decide whether a property is worth a full underwrite. Below 4% and the deal almost certainly won't cash flow at any reasonable leverage. Above 7% and there's likely real opportunity worth a closer look.
The crude rule of thumb: take the gross yield, subtract 2.5-3.5 percentage points for operating expenses, and you have an approximate cap rate. A 7% gross yield property is probably a 4.5-5% cap rate property; a 5% gross yield property is probably a 2-2.5% cap rate property.
Markets with high gross yields (Detroit, Memphis, Cleveland) typically have lower appreciation; markets with low gross yields (San Francisco, Boston, San Diego) typically have higher appreciation. Investors pick which side of that trade-off they want.
Median home value $200,000, median rent $1,500/mo. Gross yield = ($1,500 × 12) / $200,000 = 9.0%. Strong for a cash-flow-focused investor.
Concepts that connect.
Capitalization Rate (cap rate) is a property's annual NOI divided by its purchase price (or current market value), expressed as a percentage. It's an unlevered yield metric — the return an all-cash buyer would earn before financing.
Net Operating Income (NOI) is a rental property's annual gross rental income minus all operating expenses, before debt service and income taxes. NOI is the denominator of cap rate and the numerator of DSCR — it's the most-used number in rental underwriting.
BRRRR stands for Buy, Rehab, Rent, Refinance, Repeat — a real-estate investing strategy where an investor buys a distressed property cheap, renovates it, rents it out, refinances at the improved appraisal to recover most or all of the original capital, then repeats the process with the recovered capital.
The Metro Deal Report Investor Score is a 0-100 composite ranking of US real estate metros, combining rent yield (40%), buyer-market discount via sale-to-list ratio (30%), motivated-seller proxies via percent of homes sold below list (20%), and median days-on-market (10%).
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