Gross vs Net Rental Yield: Where the Other Half Goes
Gross yield and net yield differ by about half in the Bay Area. Six cities worked side by side, showing exactly which cost line takes the money and why the gap widens as prices rise.
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Gross yield is rent divided by price. Net yield is what is left after the bill. In the Bay Area the second is roughly half the first, and the ratio between them is not constant — it gets worse the more expensive the city.
That last point is the useful one, and it is not obvious. Here is why it happens.
Six cities, same assumptions, side by side
Each row uses the same cost assumptions: property tax at 1.1% of the purchase price, $2,200 insurance, vacancy at 5% of rent, maintenance at 10% of rent, management at 8% of rent, no HOA. Price and rent are Zillow's September 2026 figures.
| City | Price | Rent / mo | Gross | Costs as % of rent | Net yield |
|---|---|---|---|---|---|
| Oakley | $653,563 | $3,294 | 6.05% | 46.8% | 3.22% |
| Antioch | $590,401 | $2,814 | 5.72% | 48.7% | 2.93% |
| Oakland | $710,647 | $2,758 | 4.66% | 53.3% | 2.18% |
| Hayward | $816,424 | $2,652 | 3.90% | 58.1% | 1.63% |
| San Jose | $1,353,869 | $3,582 | 3.17% | 62.8% | 1.18% |
| San Mateo | $1,674,908 | $3,968 | 2.84% | 66.3% | 0.96% |
| Palo Alto | $3,592,240 | $4,558 | 1.52% | 99.3% | 0.01% |
Read the fourth and fifth columns together. Oakley keeps a bit over half its rent and lands at 3.22% net. Palo Alto keeps 0.7% of its rent and lands at 0.01% net — $400 a year on a $3,592,240 asset.
Why the gap widens with price
Because the cost lines are not all charged on the same thing.
Charged on the rent: vacancy, maintenance, management. Together 23% of rent on these assumptions. That share is the same in Oakley and in Palo Alto.
Charged on the price: property tax. 1.1% of the purchase price.
So as price rises relative to rent — which is exactly what a falling gross yield is — the tax line grows as a share of the rent while the rent-based lines stay put. In Oakley property tax is $7,189 against $39,528 of rent, or 18% of rent. In Palo Alto it is $39,515 against $54,696 of rent, or 72% of rent. The insurance line does the same thing more quietly.
Gross yields in the table span 6.05% down to 1.52%, a factor of 4. Net yields span 3.22% down to 0.01%, a factor of over 300.
Which number to use for what
Use gross yield to compare cities. It needs two inputs, both published, and no assumptions. It is the right tool for "where in the Bay Area does rent buy the most per dollar of price".
Use net yield to compare properties. It is the first number that reflects the actual asset — its tax basis, its HOA, its roof. Two houses on the same street can have the same gross yield and quite different net yields.
Use cash-on-cash to judge your own position. Net yield says nothing about your mortgage. At a 7% rate against net yields of 1-3%, Bay Area leverage subtracts income rather than adding it — see the worked case on how to calculate rental yield.
What this table is not
Every net yield above rests on five assumptions, and they are assumptions rather than measurements. The honest ranges:
- Property tax at 1.1% — the 1% rate is constitutional, the rest varies by parcel, and in a Mello-Roos district it can reach 1.7% or more. See Mello-Roos and rental yield.
- Insurance at $2,200 — an estimate. California's market has moved sharply and a wildfire-exposed parcel can be a multiple of this.
- Vacancy at 5% — an assumption, and specifically not the Census figure, for reasons set out on vacancy and rental yield.
- Maintenance at 10% of rent — a convention. Older housing stock runs higher.
- Management at 8% — the market norm; self-managing saves it and costs time.
- No HOA — true for most single-family houses, false for most condos, and the single biggest swing factor. See HOA fees and rental yield.
The price and rent inputs are published data. Everything subtracted from them is a judgment, and each one is named so you can substitute your own.