Quick Scoop: What is rental yield?

Rental yield is the percentage return you earn from a rental property compared with its value or purchase price. In simple terms, it tells you how much income the property generates for every dollar tied up in it.

How it works

The most common version is gross rental yield, calculated as: (Annual rent ÷ Property price) × 100

A more realistic version is net rental yield, which subtracts costs like maintenance, insurance, taxes, and management fees before dividing by the property value. That gives a clearer picture of actual profit.

Simple example

If a property costs 500,000 and brings in 30,000 in annual rent, the gross rental yield is 6%. If annual expenses are 5,000, the net rental yield drops to 5%.

Why it matters

Rental yield helps investors compare properties and judge whether the income is strong enough relative to the price. A higher yield usually means better cash flow, but it does not automatically mean lower risk or a better overall investment.

What counts as good?

There is no universal “good” rental yield because it depends on location and market conditions. Several guides say yields around 5% to 6% are often considered solid, while some markets may see higher figures.

Bottom line: rental yield is a quick way to measure a property’s income return, and net yield is usually the more useful number for real-world investing.

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