Gross vs. net rental yield
Rental yield expresses annual rent as a percentage of what the property cost — a quick way to compare income potential across properties. Gross yield is annual rent divided by price. Net yield subtracts running costs like taxes, insurance, maintenance and management fees first, giving a more realistic picture of what actually lands in your pocket.
What counts as a good yield
It varies widely by city and property type, but many investors look for gross yields somewhere in the mid single digits, with net yields a percentage point or two lower. A high yield can signal strong income or a cheaper, higher-risk area; a low yield often reflects an expensive market where investors expect price growth instead.
Yield isn't the whole story
Yield ignores capital growth, financing costs and vacancy periods. Two properties with the same yield can perform very differently once mortgage interest, empty months and future price changes are included. Use yield as a first filter, then dig deeper on the ones that pass.
Frequently asked questions
Which costs go into net yield?
Recurring ownership costs: property taxes, insurance, maintenance, management fees and similar. Mortgage payments are usually analysed separately as they depend on your financing.
Should I use purchase price or current value?
Either, depending on the question. Purchase price shows the yield on what you paid; current value shows the yield if you bought today or the return on tied-up equity.
What is rental yield?
The annual rental income as a percentage of the property's value. It shows how much a property earns relative to what it costs.
How do I calculate rental yield?
Divide the yearly rent by the property price and multiply by 100. Gross yield uses rent only; net yield subtracts costs first.
What is a good rental yield?
It varies by market, but many investors look for a net yield of 5% or more. Compare it against other properties and other investments.