1. Measuring Rental Yield (Income-Based Return)

Rental yield, or income return, is a straightforward gauge of profitability. For example: a property worth $450,000 that yields $1,500 per month in rent ($18,000 annually) delivers a gross annual yield of 4%.
However, this basic calculation omits expenses like mortgage interest, maintenance, or other costs-so it offers only a rough estimate.
Example: if a $30,000 mortgage ends up costing $45,000 with interest, your real returns will be lower than the headline figure suggests.

2. Evaluating Capital Appreciation (Equity Gain)

Equity return reflects the increase in a property's value over time. For instance, a home bought for $300,000 that grows in value to $360,000 has achieved a 20% equity return - a powerful impact often outweighing rental income. An investor should always consider both types of return to make a fully informed decision.

3. National Averages and Context

• In 2022, the average rental yield across the U.S. was about 2.7%, significantly lower than the 4%+ observed in 2002.

• Smaller apartments (2–3 bedrooms) and properties outside central cities tend to yield higher rental returns. Suburban areas typically outperform densely built-up locations like New York or San Francisco.

• Equity appreciation remains strong, with property value growth continuing to make real estate a worthwhile long-term investment—in spite of some recent market cooling.

Why This Matters for Investors

1. Real Data, Real Decisions — Don't rely on outdated assumptions or guesswork. Brick gives you up-to-date rental and value trends.

2. Double-Barreled Return Analysis — Combine rental income and equity growth to fully assess your investment's profitability.

3. Smarter Comparisons — See how different neighborhoods, property sizes, or cities perform—especially when weighing central locations against higher-yield suburbs.

4. Strategic Advantage — Know when to enter or exit the market, where to focus limited funds, and which portfolios to prioritize for maximum return.

In Summary

• Rental yield offers a basic measure of your cash flow but often understates the true return.

• Capital appreciation can significantly boost total returns—especially in hot markets or following property improvements.

• Rental yields in the U.S. tend to range from 2.7% to 4%, while equity gains vary by market.

• Brick, fueled by real-time, AI-analyzed data, lets you see both sides of the equation clearly—and for free.