Yield Valuation Calculator
Convert a property net income into a capital value at a chosen yield, test the sensitivity to a yield shift, and net off purchase costs.
💼 Are you a real estate agent or broker? Send this calculator to your buyers on your own branded listing page — every enquiry comes straight to your WhatsApp. Create free agent page →Income-producing property is valued by capitalising its net income at a yield: value equals income divided by yield. It is the same arithmetic everywhere, and the whole argument in any valuation is about which yield is appropriate.
Small yield movements produce large value movements, which is why the sensitivity matters as much as the headline figure. A half-point shift on a modest yield can move value by seven or eight percent.
The formula
Capital value = annual net income ÷ yield. To find the price to pay rather than the value, divide by one plus the purchase costs percentage, since the buyer total outlay including costs is what has to produce the target yield.
Worked example
Net income of 45,000 capitalised at 6.5% gives a value of 692,308. At 7% it is 642,857 — a half-point shift moves value by 49,451, or 7.1%. With 6.5% purchase costs, the price to pay to achieve a 6.5% yield on total outlay is about 650,054.
Get the income right first
The yield is contested, but the income is where errors do the most damage. Use net income after running costs and a realistic vacancy allowance, not gross rent, and check whether any of it is temporary — a rent-free period ending or a short lease expiring changes the sustainable figure entirely.
Turn a calculation into an enquiry
Buyers who run these numbers are ready to talk. Give every listing its own page with your photo, phone and WhatsApp on it — leads land straight on your phone.
Create your free property pageFrequently asked questions
What yield should I use?
One drawn from actual transactions of comparable assets in the same market, adjusted for lease length, tenant quality and building condition. A yield chosen to produce a desired answer is not a valuation.
Why does a small yield change move value so much?
Because value is income divided by yield, so the relationship is reciprocal rather than linear. Moving from 6.5% to 7% is a 7.7% relative change in the divisor and roughly a 7.1% fall in value.
Should the income be gross or net?
Net of running costs and a vacancy allowance, matching the basis on which comparable yields were derived. Mixing a gross income with a net yield overstates value substantially.