Real Estate Net Rental Yield, Cap Rate, EMI & Step-Up SIP Calculator (2026)

Gross Rental Yield simply divides Annual Gross Rent by Property Price: (Monthly Rent × 12) ÷ Price. Capitalization Rate (Cap Rate) or Net Rental Yield uses Net Operating Income (NOI)—subtracting real operating expenses like vacancy periods, property taxes, building insurance, and HOA/maintenance reserves—divided by the total acquisition cost.

Cap Rate evaluates a property assuming an all-cash purchase (ignoring mortgage financing). Cash-on-Cash Return measures the actual pre-tax annual cashflow (NOI minus annual Mortgage EMI payments) divided by the actual out-of-pocket cash invested (Down Payment + Closing Costs).

Because of mortgage leverage: if you put 20% down ($100k) on a $500k property, you earn 6% appreciation on the entire $500k asset ($30k gain in Year 1 = 30% gross return on your $100k equity before borrowing costs), while the tenant's rent subsidizes a portion of the mortgage interest and principal paydown.

When your mortgage interest rate (e.g., 8.5%) is significantly higher than the property's Net Cap Rate (e.g., 3.0%) and capital appreciation is sluggish (<4%), the negative monthly cashflow outflow (EMI minus Net Rent) compounds against you—allowing an unleveraged 11%–12% Equity SIP invested with the same down payment and monthly deficit to win easily.

Using the standard reducing-balance annuity formula: EMI = P × r × (1 + r)^n ÷ ((1 + r)^n − 1), where P is the loan principal, r is the monthly interest rate (Annual Rate ÷ 12 ÷ 100), and n is the total number of monthly payments (Years × 12).