Understanding Rental Yield
Rental yield is the most important metric for any real estate investor. It tells you exactly how much return your property is generating relative to its value.
Gross vs Net Yield
Gross Rental Yield is calculated by dividing your annual rental income by the property value. For example, if your property is worth ₹1 Crore and generates ₹40,000 monthly rent (₹4.8 Lakhs annually), your gross yield is 4.8%.
Net Rental Yield is the more accurate figure. It deducts all property-related expenses (maintenance, property tax, insurance, vacancy periods) from the annual income before dividing by the property value.
Average Yields in India
- Residential properties typically yield 2-4% in major metros.
- Commercial properties often yield 6-9%.
- Co-living and student housing can push yields up to 8-10%.
Using a property management software like MyProperty helps you accurately track all expenses to calculate your true net yield automatically.