One investor who was consulting about Boise properties mistakenly confused net yield and gross yield while preparing a spreadsheet. While reviewing a 2-bedroom rental priced at $1,765 with a purchase price around $495,000, they referred to the figure of over 5 percent, which was derived by dividing the annual rental income by the purchase price, as the net yield. However, this figure was actually the gross yield, as it did not account for any operating expenses.

To clarify the numbers, the median rent in Boise for 2026 is projected to be $1,800 according to Zillow, while RentCafe reports an average of $1,720. For 2-bedrooms specifically, the figure is around $1,765. At the same time, the median home price in Boise was $494,880, and when considering the entire Boise metro area, it is expected to rise to $534,700 by August 2026. It's important to keep in mind that this number can vary significantly depending on the location within the city.

Calculating the gross yield with these numbers, the annual rental income of $21,180 divided by the purchase price of $495,000 results in a figure of about 4.28 percent. This was the number the consultant referred to as the net yield, but the gross yield is simply the ratio of purchase price to rent, without accounting for operating expenses such as property taxes, insurance, management fees, maintenance costs, and vacancy losses. The effective property tax rate in Idaho is around 0.49 to 0.53 percent, which is noticeably lower than the national average of 0.91 percent, but that does not mean that all operating expenses are low.

If we apply the 50 percent rule and assume that operating expenses, excluding mortgage principal and interest, are about half of the rental income, then approximately $10,590 would be deducted from the annual $21,180, leaving the remaining amount as net operating income (NOI). The cap rate, calculated by dividing this NOI by the purchase price, is around 2.14 percent, which is about half of the initially confused 4.28 percent. The significant gap between net income and gross income ultimately comes down to how much of the expenses are accounted for.

Delving a bit deeper, we arrive at the cash-on-cash return. This is calculated by comparing the actual cash invested, such as the down payment and closing costs, against the pre-tax cash flow when financing the purchase. Depending on the leverage ratio, this can yield a figure that is either higher or lower than the cap rate. While the cap rate indicates profitability assuming a cash purchase without financing, cash-on-cash return is closer to the actual perceived yield, making it important to distinguish between the two.

There is considerable variation within Boise itself. Areas near school districts preferred by Korean families, such as downtown or the North End, often have higher average purchase prices, which tends to lower both gross yield and cap rate. School district ratings can be checked on GreatSchools or Niche, but since school boundaries frequently change, it's advisable to verify the actual assigned school for a given address before purchasing.

If relocating to Boise from another state, you may find the property tax burden lighter compared to California or major metropolitan areas in the East, but it's essential to consider that the rental market supply dynamics can vary by region. Recently, Boise rentals have been declining from their peak, with inventory increasing and properties selling within 26 days, indicating a trend toward market stabilization. This trend could impact rental demand and vacancy rates, which should also be factored into yield calculations.

Ultimately, gross yield, cap rate, and cash-on-cash return each answer different questions. Gross yield reflects revenue scale, cap rate shows actual profitability after expenses, and cash-on-cash return indicates perceived yield accounting for leverage. Failing to distinguish between these can lead to misunderstandings, as seen in this consultation case. This article does not constitute investment or legal advice, and it is recommended to verify tax rates and rental prices before making any agreements and to consult with a professional.