Measures
Real Estate
Rental Yield Calculator
Calculate gross and net rental yield on a property investment, accounting for vacancy, maintenance, and other expenses.
Fast estimates
Clear breakdown
Planning friendly
Best for
Property investors
Output
Yield percentage
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Provide values to generate an instant estimate.
Before you calculate
- Gross yield ignores expenses; always check the net yield for a realistic picture.
- In Indian metros, rental yields typically range from 2% to 4%.
- Include society maintenance, property tax, insurance, and repair reserves.
Understanding Rental Yield
Rental yield measures how much return a property generates as a percentage of its value. It's a crucial metric for evaluating real estate investments.
1. Focus on net yield after all leakages
With rental yield, the key number is net yield after vacancy and maintenance, not just gross rent ÷ property value. Use realistic vacancy months and include society charges, property tax and repairs.
2. Compare yield with alternative investments
Once you know net yield, compare it with what you could earn from safer instruments like FDs or debt funds and from diversified equity. Property should ideally beat fixed-income returns after adjusting for effort and risk.
Gross yield vs net yield: what to actually use
Gross rental yield = (Annual rent ÷ Property value) × 100. Net rental yield deducts vacancy, maintenance, property tax, and agent commissions before dividing. In Indian cities, the gap is often 0.5–1.5 percentage points. A 3% gross yield property with significant vacancy and maintenance can drop below 2% net — below savings account returns. Always evaluate net yield for investment decisions.
Rental yield benchmarks across Indian cities
Metro residential yields are typically 2–3.5%: Mumbai premium areas are at the lower end (2–2.5%), Hyderabad and Bengaluru tech corridors reach 3–3.5%. Tier-2 cities like Pune's outer areas or Chennai suburbs can deliver 3.5–4.5%. Commercial properties — office and retail in high-footfall locations — yield 6–9% but require larger capital and longer lease negotiations.
Yield vs appreciation: the property investment tension
High-yield properties often see lower capital appreciation, and vice versa. In metros where historical price growth is 6–8%, total return (yield + appreciation) can justify a 2.5% gross yield. Evaluate both components together — not yield alone — to assess whether a property offers adequate total return versus financial alternatives.
Improving rental yield practically
Negotiating a higher rent at renewal when market rents have risen is the strongest lever. Reducing vacancy periods through timely maintenance, competitive pricing, and better tenant screening directly adds to effective yield. For older properties, targeted renovation often enables a rent increase that yields 15–30% return on renovation cost.
Frequently Asked Questions
What is rental yield and how is it calculated?
Rental yield = Annual rental income ÷ Current property market value × 100. A ₹60 lakh property renting at ₹18,000/month has a gross annual income of ₹2.16 lakh and a gross yield of 3.6%. Net yield requires subtracting annual maintenance, vacancy losses, property tax, and management fees from the numerator.
Why are Indian residential rental yields so low?
Property prices in Indian metros have appreciated significantly relative to rents over the past decade, compressing yields. Buyers in premium locations accept 2–3% yields expecting 6–8% capital appreciation, giving a combined total return of 8–11%. Yields are higher in tier-2 cities where purchase prices are more moderate.
What is a good rental yield in India?
For residential property, 3%+ gross yield is generally acceptable. Net yield of 2.5%+ after all costs is reasonable for appreciated urban locations. Commercial benchmarks are higher — typically 6–8% for Grade-A office, 7–9% for retail with strong anchor tenants. Compare to the 10-year government bond rate (~7%) as a risk-free baseline.
Does a loan change the rental yield calculation?
Rental yield as shown here uses property market value and does not factor in financing. For levered investors, the relevant metric is cash-on-cash return: (Net rental income − Annual loan repayment) ÷ Equity invested. If rental income covers less than the loan EMI, the property generates negative cash flow despite a positive gross yield.