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Rental Yield vs. Treasury Bond Calculator

In September 2026, the national rental cap rate fell below the 10-year Treasury yield for the first time in 20+ years — meaning rental income, before financing, was paying less than a risk-free bond. Enter your own numbers to see your unlevered cap rate and leveraged cash-on-cash return against the live 10-year Treasury yield.

Quick answer: See whether a rental property's income actually beats a risk-free 10-year Treasury bond, unlevered and with your real financing. Built after the national cap-rate/Treasury spread went negative for the first time in 20+ years. Enter purchase price, monthly rent, down payment, and mortgage rate to personalize the estimate. It returns cap rate vs. Treasury spread, cash-on-cash return, and leveraged total return so you can compare the impact before choosing a next step. Use it to compare long-term value, tax impact, risk, time horizon, and contribution choices.

SWReviewed by SwitchWize Research Desk · Last reviewed September 24, 2026

Your decision

Unlevered cap rate: 4.30% (-0.05 pts vs. the 10-year Treasury). With leverage and assumed appreciation, modeled total return on cash invested is 10.47%.

Recommended: Buy and hold this rental

Cap rate vs. Treasury

Watch

-0.05 pts

4.30% cap rate

Unlevered net operating income yield minus the live 10-year Treasury yield — the same spread that went negative nationally for the first time in 20+ years in Sept 2026.

Cash-on-cash return

Costly

-7.79%

$-597/mo

Annual cash flow after mortgage payments, divided by the actual cash you put in (down payment + closing costs).

Leveraged total return

Good

10.47%

+6.12 pts vs. Treasury

Cash flow plus assumed annual equity appreciation, as a % of cash invested — the leveraged answer to the same Treasury comparison.

DSCR

Costly

0.71

Break-even vacancy: 0.0%

Net operating income divided by annual mortgage payments; most lenders want 1.20+. Break-even vacancy is the rate at which cash flow hits zero.

Ranked options

#1Buy and hold this rental
Modeled annual return on your $92,000 cash invested: $-7,165 cash flow plus $16,800 of assumed equity appreciation, or 10.47% total.
$9,635/yr
Confidence: MediumEffort: HighRisk: Medium
#2Hold the same cash in a 10-year Treasury
$92,000 at the live 10-year Treasury yield of 4.35% returns $4,002/yr with no vacancy, maintenance, tenant, or leverage risk.
$4,002/yr
Confidence: HighEffort: LowRisk: Low

Watch-outs

• This property's unlevered cap rate (4.30%) is below the current 10-year Treasury yield (4.35%) — before financing, your cash would earn more sitting in a risk-free bond than in this property's net operating income.
• Modeled monthly cash flow is negative ($-597/mo) — you would cover the shortfall out of pocket every month at the entered rent, vacancy, and expense assumptions.
• Debt service coverage ratio is 0.71 (below 1.0) — net operating income does not fully cover the mortgage payment, a number most lenders would also flag.
• The appreciation assumption is a historical average, not a forecast — actual future price and rent growth may differ, sometimes substantially. Adjust it under Assumptions to stress-test your own view.

Assumptions used

Purchase price: $400,000
Down payment / closing costs: $80,000 / $12,000
Cash invested: $92,000
Mortgage: $320,000 at 6.53%, $2,029/mo P&I
Effective gross income: $27,360/yr (after 5.00% vacancy)
Total operating expenses: $10,178/yr
Net operating income (NOI): $17,182
Assumed annual appreciation: 4.20%
10-year Treasury yield used: 4.35%

Estimates use the amounts and assumptions you enter. Confirm the rules and your circumstances before acting.

Where this rate sits

Today's rate of 4.35% is at the 47th percentile of its ~1 year range (3.97%–5.31%). That's roughly in the middle of its own recent range.

FRED series (treasury10y). Historical data, not a forecast.

Next steps

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Why this matters

Cap rate (net operating income divided by price) has historically run above the "risk-free" 10-year Treasury yield to compensate for illiquidity, vacancy, and management risk. When that spread goes negative, a rental buyer is accepting less income yield than a Treasury bond pays with none of that risk — a real signal that new purchases increasingly depend on appreciation, not cash flow, to pencil out. This calculator applies that same comparison to your specific deal, then layers in financing to show whether leverage changes the answer.

Frequently asked questions

What is cap rate and why compare it to a Treasury bond?

Cap rate is a property's net operating income divided by its purchase price — the unlevered income yield, before any mortgage. Comparing it to the 10-year Treasury yield answers a simple question: is this property's income, on its own, beating what you could earn risk-free? Historically cap rates ran meaningfully above Treasury yields; that spread turned negative nationally for the first time in over 20 years in September 2026.

Does leverage change the answer?

It can. A mortgage lets you control a larger asset with less cash, so if the property appreciates, your return on the cash you actually invested can exceed the unlevered cap rate — but leverage also means a vacancy or expense overrun hits your cash flow harder. This calculator shows both: the unlevered cap rate spread and the leveraged total return (cash flow plus assumed appreciation) on your actual cash invested.

Where does the appreciation assumption come from?

It defaults to the real trailing ~15-year compound annual growth rate of the FRED national median new-home sale price (MSPUS), computed from SwitchWize's own tracked history — not a guess or a forecast. It is fully editable; a historical average is a starting point, not a promise about the future.

What is DSCR and why does it matter?

Debt service coverage ratio is net operating income divided by annual mortgage payments. Most lenders want to see 1.20 or higher on an investment property loan; below 1.0 means the property's own income does not fully cover its mortgage payment.

Is this financial advice?

No — it is an educational estimate using the numbers you enter plus live market rates. Real deals involve financing terms, taxes, and risks this model simplifies. Verify any specific deal with a lender and your own diligence before buying.

This tool produces estimates based on the assumptions you enter. It is not financial, tax, or legal advice. Actual rates, fees, and outcomes depend on your lender, account terms, and approval.