What is Rental Yield?
The most important number every property investor must know — and how to calculate it in 10 seconds.
TL;DR
Rental yield is the annual rental income from a property expressed as a percentage of its market value. Formula: (Annual Rent ÷ Property Value) × 100. A property worth ₹50 lakhs earning ₹2.4 lakhs/year has a 4.8% gross yield. In India, 3-5% is average for residential, 6-10% for commercial.
The Formula
Gross Rental Yield = (Annual Rent ÷ Property Value) × 100
Example
You buy a flat in Bangalore for ₹50,00,000. You rent it out for ₹20,000/month.
- Annual Rent = ₹20,000 × 12 = ₹2,40,000
- Gross Yield = (2,40,000 ÷ 50,00,000) × 100 = 4.8%
Gross vs Net Rental Yield
Gross yield uses the raw rent figure. Net yield subtracts ongoing expenses:
- Maintenance and repairs
- Property tax
- Insurance premiums
- Property management fees
- Vacancy periods (months the unit is empty)
Net yield is typically 1-2% lower than gross yield and gives you a more realistic picture of actual returns.
Average Rental Yields by Indian City (2026)
| City | Residential | Commercial |
|---|---|---|
| Mumbai | 2–3% | 6–8% |
| Bangalore | 3.5–4.5% | 7–9% |
| Pune | 3–4% | 7–9% |
| Delhi NCR | 2.5–3.5% | 6–8% |
| Hyderabad | 3.5–4.5% | 7–10% |
| Ahmedabad | 3–4.5% | 7–9% |
Frequently Asked Questions
What is rental yield?
Rental yield is the annual rental income from a property expressed as a percentage of the property's market value. It helps investors compare the returns of different properties. Gross rental yield = (Annual Rent / Property Value) × 100.
What is a good rental yield in India?
In India, a gross rental yield of 3-5% is considered average for residential properties. Commercial properties can yield 6-10%. Cities like Bangalore and Pune tend to offer higher yields (3.5-4.5%) compared to Mumbai (2-3%) due to high property prices.
How do you calculate rental yield?
Gross Rental Yield = (Annual Rent ÷ Property Purchase Price) × 100. For example, if your property costs ₹50 lakhs and annual rent is ₹2.4 lakhs, the gross yield is 4.8%. Net rental yield subtracts expenses like maintenance, property tax, and insurance.
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