What Is a Good Rental Yield in the US? (2026 Guide)

If you are thinking about buying a rental property, one of the first questions you need to answer is: what is a good rental yield? It sounds simple, but the answer depends on the type of property you are buying, the market you are investing in, and how you are financing the deal.

In this guide we break down exactly what rental yield means, what counts as a good return in the US market in 2026, and how to calculate it for any property you are considering.

What Is Rental Yield?

Rental yield is the annual return you earn on a property relative to its purchase price. It is one of the most important metrics in real estate investing because it tells you how hard your money is working.

There are two types of rental yield:

Gross rental yield — this is the simplest calculation. You take the annual rent and divide it by the property purchase price, then multiply by 100 to get a percentage. For example: if a property costs $300,000 and generates $24,000 in annual rent ($2,000 per month), the gross yield is 8%.

Net rental yield — this is the more accurate and useful number. It subtracts all your annual expenses (property management fees, insurance, maintenance, vacancy allowance, property tax) from the annual rent before dividing by the purchase price. Using the same example: if your annual expenses total $8,000, your net income is $16,000. Divide by $300,000 and you get a net yield of 5.3%.

Net yield is what actually goes in your pocket. Always calculate both but make decisions based on net yield.

What Is a Good Rental Yield in the US?

As a general rule of thumb for the US market in 2026:

• Below 4% net yield — considered low. Common in high-cost markets like San Francisco, New York, and parts of Los Angeles.
• 4% to 6% net yield — average. Decent cash flow with some room for expenses.
• 6% to 8% net yield — good. Strong cash flow, manageable risk. This is what most experienced investors target.
• 8% and above net yield — excellent. Usually found in lower cost markets with strong rental demand.

Most seasoned real estate investors in the US aim for a minimum of 6% net yield before they will seriously consider a deal.

Rental Yield vs Cash on Cash Return

Rental yield uses the full purchase price as the denominator. Cash on cash return uses only the cash you actually invested — your down payment plus closing costs and any renovation budget.

If you put 25% down on a $300,000 property ($75,000) and your net annual cash flow is $7,200, your rental yield is 2.4% but your cash on cash return is 9.6%.

Cash on cash return is often more useful for leveraged investors because it measures the return on the money you actually have at risk.

What Factors Affect Rental Yield?

Purchase price — the lower the purchase price relative to achievable rent, the higher the yield.

Monthly rent — determined by local rental demand, property quality, and amenities. Research comparable rentals before buying.

Vacancy rate — even a 5% vacancy allowance can meaningfully reduce your net yield. Markets with low vacancy rates (under 5%) are preferable.

Property management costs — if you use a property manager expect to pay 8-12% of monthly rent.

Maintenance and repairs — budget 1% of the property value per year for maintenance. Older properties may need more.

Property tax — varies enormously by state and county. Always check the specific tax rate for the county you are investing in.

Insurance — homeowners insurance on a rental property typically costs more than a primary residence.

Best US Markets for Rental Yield in 2026

Midwest markets — cities like Cleveland, Detroit, Indianapolis, and Kansas City consistently deliver gross yields of 8-12% due to low purchase prices and solid rental demand.

Southeast markets — Birmingham, Memphis, and Jacksonville offer strong yields in the 7-10% range.

Texas secondary cities — San Antonio, El Paso, and Lubbock offer solid yields in the 6-8% range.

Ohio — consistently ranks as one of the best states for rental yield. Columbus, Cincinnati, and Dayton all offer good returns.

High cost markets like New York, San Francisco, Seattle, and Boston typically deliver gross yields of 2-4%. Investors in these markets are primarily betting on appreciation.

How to Increase Your Rental Yield

Raise the rent — if you have not raised rent in line with the market, research comparable rentals and bring your rent to market rate at the next lease renewal.

Reduce vacancy — proactive tenant retention, quick turnaround between tenants, and competitive pricing all help.

Self-manage — if you currently pay a property manager 10% of rent, self-managing can add 1-2% to your net yield instantly.

Add a bedroom — converting a bonus room or basement into an additional bedroom can significantly increase achievable rent.

Add laundry — in-unit washer dryer connections are one of the highest ROI improvements. Tenants will pay $100-200 more per month in many markets.

Reduce financing costs — if rates have dropped since you purchased, refinancing can improve cash flow.

Common Rental Yield Mistakes to Avoid

Using gross yield to make decisions — always calculate net yield. Gross yield can look attractive but hide a deal that barely breaks even.

Forgetting vacancy — a realistic vacancy allowance of 5-8% should always be included.

Underestimating maintenance — especially on older properties. Budget conservatively.

Ignoring property tax — in high tax states, property tax alone can reduce your net yield by 1-2 percentage points.

Chasing yield without considering the market — a 12% gross yield in a declining market is worse than a 6% yield in a stable growing market.

Calculate Your Rental Yield Now

Stop guessing and run the real numbers on any property you are considering. Our free Rental Yield Calculator gives you gross yield, net yield, and cash on cash return in under 60 seconds.

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