Gross rental yield gives a top-line return estimate before expenses. It is useful for rapidly comparing markets or properties, but less precise than cap rate since it ignores all expenses.
Gross Rental Yield = (Annual Gross Rent ÷ Purchase Price) × 100
Example: $2,400/month rent × 12 = $28,800/year ÷ $350,000 price = 8.2% gross yield.
The 1% Rule is a simplified version of gross yield: monthly rent ≥ 1% of price implies ≥ 12% gross annual yield, which historically supports positive cash flow in most markets after expenses.