Rental yield calculator

How the yield calculator works

We work out the gross yield as the annual income divided by the price, expressed as a percentage. The net yield deducts the annual operating costs from the income first, then divides by the price, so it reflects what you keep after staff, utilities, business rates, insurance and marketing. The annual net income is simply the income minus those costs.

The formula is gross yield equals annual income divided by price multiplied by one hundred. Net yield equals annual income minus annual costs, divided by price, multiplied by one hundred. Leave costs at zero if you only want the gross figure.

Gross versus net on a self storage investment

Gross yield is the headline most agents quote, but net yield is the honest figure on self storage, because a store is a trading business and the operating costs come out of your income rather than a tenant's. The net figure is effectively the net operating income, or EBITDA, that a lender will use to size a loan, so it does double duty in your appraisal. Occupancy matters too. A store still in its lease-up phase, which typically runs 3 to 5 years, will show a thinner yield today than at stabilisation. To see how the income supports a loan, use our how much can I borrow calculator.

Worked example

On a 1 million pound self storage facility producing 75,000 pounds of income a year, the gross yield is 7.50 percent. Deduct 8,000 pounds of operating costs and the annual net income is 67,000 pounds, giving a net yield of 6.70 percent. Before treating that as the run rate, we would check the occupancy level behind it and whether the income reflects a stabilised store or one still discounting to fill units.