Rental yield
Gross yield is a year’s rent as a share of the price. Net yield is what is left after the months the place stands empty and the costs of owning it, which is the number to compare with a fixed deposit.
Example: a Rs. 30 million apartment let at Rs. 150,000 a month.
- Gross yield
- 6.00%
- Net yield
- 5.50%
- Rent collected in a year
- Rs. 1,650,000
- Net income in a year
- Rs. 1,650,000
- Years of net income to recover the price
- 18.2
- Before income tax on the rent, which depends on your own tax position.
- It ignores any rise or fall in the property’s value, which is often most of the return.