Gross rent yield is the annual rent a property can collect divided by its price or value, expressed as a percentage, before any expenses are deducted. It is calculated by multiplying the monthly rent by 12 and dividing by the purchase price. For the typical U.S. home as of August 31, 2026, DataPorium's housing data show a value of $368,697 and a typical rent of $1,948 per month, so annual rent of $23,376 divided by the value gives a gross rent yield of 6.3% [1]. The same calculation ranges from about 3.1% in San Jose to about 20.8% in Detroit, which shows why the ratio is the first screen most rental investors run [1].
What is gross rent yield and how is it calculated?
The formula has two inputs and one step:
- Annual gross rent: monthly rent multiplied by 12. For the U.S. median, $1,948 times 12 equals $23,376 [1].
- Price or market value: the purchase price including closing costs, or the current market value for a property already owned. For the U.S. median home that is $368,697 [1].
- Divide: $23,376 divided by $368,697 equals 0.0634, or 6.3% [1].
The result is gross because nothing has been taken out for vacancy, property taxes, insurance, repairs, management or mortgage interest. A related shortcut is the price-to-rent ratio, which is simply the inverse: $368,697 divided by $23,376 equals 15.8, meaning the home costs 15.8 years of rent [1]. A gross yield of 6.3% and a price-to-rent ratio of 15.8 are the same fact expressed two ways.
Gross yield versus net yield and cap rate
Net rent yield, also called the cap rate, subtracts operating expenses from rent before dividing by price. On a typical single-family rental, expenses often absorb 35% to 45% of gross rent, so a 6.3% gross yield becomes roughly a 3.5% to 4.1% net yield. Gross yield is still useful because it needs only two numbers that are available for every market, which makes it the right tool for comparing cities before analyzing a specific property.
Gross rent yield by city in August 2026
The table applies the formula to ten large U.S. cities using DataPorium's Zillow-based home value index (all homes, smoothed and seasonally adjusted) and rent index (all homes plus multifamily, seasonally adjusted) for August 31, 2026, available on DataPorium's housing market insights [1].
| City | Typical home value | Typical monthly rent | Annual rent | Gross rent yield |
|---|---|---|---|---|
| Detroit, MI | $77,199 | $1,341 | $16,088 | 20.8% |
| Cleveland, OH | $120,419 | $1,391 | $16,688 | 13.9% |
| Memphis, TN | $145,335 | $1,232 | $14,785 | 10.2% |
| Chicago, IL | $334,030 | $2,342 | $28,103 | 8.4% |
| Pittsburgh, PA | $239,865 | $1,545 | $18,543 | 7.7% |
| Houston, TX | $261,740 | $1,542 | $18,506 | 7.1% |
| United States | $368,697 | $1,948 | $23,376 | 6.3% |
| New York, NY | $822,517 | $4,154 | $49,850 | 6.1% |
| Austin, TX | $497,418 | $1,586 | $19,027 | 3.8% |
| Los Angeles, CA | $929,572 | $2,778 | $33,341 | 3.6% |
| San Jose, CA | $1,362,808 | $3,563 | $42,755 | 3.1% |
Source: DataPorium housing market data as of August 31, 2026 [1]. These are city-wide approximations. The value index covers all homes, including owner-occupied ones, while the rent index covers the rental stock, so the ratio for a given property can differ. Detroit's 20.8% reflects a very low median value of $77,199 rather than high rents, and in low-value markets taxes, insurance and repairs take a much larger share of rent, so net yields are far lower than gross yields suggest [1].
Zillow's national rent report published August 18, 2026 adds context: the typical U.S. asking rent was $1,962 in July, up 2.3% from a year earlier, the fastest annual pace in over a year, while multifamily building permits in the second quarter were 31% below their 2022 peak [2]. Slower construction supports rents and, other things equal, gross yields in the years ahead.
How investors use gross rent yield
- Screening markets: the spread between Detroit at 20.8% and San Jose at 3.1% is the first fact an investor needs. Low-yield cities depend on price appreciation for returns; high-yield cities depend on collecting rent [1].
- Setting a maximum price: rearranging the formula, price equals annual rent divided by the target yield. An investor who requires an 8% gross yield on a property renting for $1,545 a month ($18,540 a year) should pay no more than about $231,750, close to Pittsburgh's median value [1].
- Comparing with bonds: the 10-year Treasury yielded 5.17% and the 3-month bill 4.24% as of September 25, 2026 [3]. A gross yield below the 10-year, as in Austin, Los Angeles and San Jose, means the rental income alone does not compensate for the work and risk of ownership before appreciation [1][3].
- Financing check: the average 30-year fixed mortgage rate was 7.03% in the week of September 24, 2026 [4]. When the gross yield is below the mortgage rate, and the net yield is lower still, borrowing to buy produces negative cash flow.
- Tracking over time: a rising gross yield in a city means rents are outrunning prices, which has historically preceded price recoveries; a falling yield means the opposite.
Investors may consider gross rent yield as a filter, not a verdict. A 10% gross yield in a market with weak tenant demand, high property taxes and rising insurance costs can net less than a 6% yield in a market with low costs and steady population growth. The next steps after the screen are a line-by-line expense budget, a check of local property taxes, and a comparison with the DataPorium property finder listings to see actual asking prices and rents [1].
Gross rent yield is annual rent divided by price, and as of August 31, 2026 it ranged from 3.1% in San Jose to 20.8% in Detroit against a national figure of 6.3%.
Key takeaways
- Gross rent yield equals monthly rent times 12 divided by price; the U.S. typical home yielded 6.3% as of August 31, 2026 [1].
- Yields in August 2026 ranged from 3.1% in San Jose and 3.6% in Los Angeles to 13.9% in Cleveland and 20.8% in Detroit [1].
- Gross yield ignores expenses; net yield (cap rate) is typically 35% to 45% lower for single-family rentals.
- Compare the yield with the 10-year Treasury (5.17%) and the 30-year mortgage rate (7.03%) before using leverage [3][4].
- Use gross yield to rank markets and set a maximum price, then confirm with a full expense budget.
Frequently asked questions
How do you calculate gross rent yield?
Multiply the monthly rent by 12 and divide by the property price. A home worth $368,697 renting for $1,948 a month has annual rent of $23,376 and a gross rent yield of 6.3% [1].
What is a good gross rent yield in 2026?
With the 10-year Treasury at 5.17% and mortgage rates near 7% in late September 2026, a gross yield of 8% or more leaves room for expenses and still beats bonds; the U.S. average was 6.3% in August 2026 [1][3][4].
What is the difference between gross rent yield and cap rate?
Gross rent yield uses total rent before costs; the cap rate uses net operating income after taxes, insurance, maintenance and vacancy. The cap rate is lower and closer to the cash an owner actually keeps.
Which U.S. cities have the highest rent yields?
Based on DataPorium data for August 2026, Detroit (20.8%), Cleveland (13.9%) and Memphis (10.2%) had the highest gross yields among the cities reviewed, while San Jose (3.1%), Los Angeles (3.6%) and Austin (3.8%) had the lowest [1].
Sources & References
- [1] DataPorium Housing Market Insights (Zillow home value and rent indexes by city)
- [2] Zillow, Rents near $2,000, rising at the fastest pace in over a year (August 18, 2026)
- [3] U.S. Department of the Treasury, Daily Treasury Par Yield Curve Rates, September 2026
- [4] DataPorium Economic Metrics (30-year fixed mortgage rate)
