Find the gross rental yield a property gives you.
Annual rent is expressed as a percentage of the property's value.
Gross yield: Annual rent ÷ Property value × 100
The rental yield calculator measures how much rent a property earns each year as a percentage of its value. You enter the annual rent and the property value, and it returns the gross rental yield.
Yield is the property equivalent of an interest rate on a deposit. It lets an investor compare a flat that rents for ₹25,000 a month with a shop that rents for ₹60,000 a month, or compare either of them with a fixed deposit, on one scale. Residential yields in many Indian cities are modest, so buyers who plan to rent out a flat use this figure to judge whether the rent will meaningfully support the EMI or whether the investment case rests mainly on the price rising.
The calculator gives gross yield, before costs such as maintenance, property tax, vacancy and tax on rent.
1. Take the monthly rent and multiply by 12 to get the annual rent. Use the rent actually agreed, not the asking rent.
2. Take the property value: the current market value, or the purchase price if you are judging your own buy.
3. Divide annual rent by property value.
4. Multiply by 100: gross yield % = annual rent ÷ property value × 100.
5. For net yield, subtract annual costs such as society maintenance, property tax, repairs and expected vacancy from the rent before dividing.
6. Compare the yield with the rate on your home loan and with the return on safe deposits.
Gross yield uses the rent before any expenses. Net yield subtracts what the owner actually pays: society maintenance, municipal property tax, repairs, brokerage for new tenants, insurance and months when the flat is empty. Net yield can be well below gross yield. For example, a ₹3,00,000 rent on a ₹90 lakh flat is a 3.33% gross yield, but ₹50,000 of annual costs brings the net yield to about 2.8%. Income tax on rental income reduces the return further.
The total return on a property has two parts: rental yield and the change in its price. If the value rises by 5% a year and the net yield is 2.5%, the rough total return is about 7.5% before tax and costs. This is why investors accept low yields in cities where they expect prices to rise, and demand higher yields where they do not. Comparing only the yield with a fixed deposit rate ignores appreciation; comparing only appreciation ignores rent.
Using the purchase price gives the yield on what you paid, which rises over time as rents grow. Using the current market value gives the yield on the money you have tied up today, which is the right number when deciding whether to keep or sell. The two can differ widely for a property bought many years ago. Commercial property usually has higher yields than residential property because of longer leases and tenants who bear more costs, but it also carries higher vacancy risk.
Manoj owns a flat in Navi Mumbai worth ₹90,00,000 that is rented out at ₹25,000 a month, or ₹3,00,000 a year.
Answer: Gross rental yield 3.33%
Entering the monthly rent instead of the annual rent.
Quoting gross yield as if it were the return in hand, ignoring maintenance, tax and vacancy.
Comparing rental yield with a fixed deposit rate while ignoring price appreciation.
Using the asking rent rather than the rent tenants actually pay.
Judging whether a flat bought to rent out will earn enough.
Comparing residential and commercial property for investment.
Deciding whether to keep a rented property or sell and invest elsewhere.
Checking whether rent will cover a meaningful share of the EMI.
What is a good rental yield in India?
In most Indian cities, home rental yields are usually 2-4%. This is lower than many other countries, since Indian homes are often bought more for their value going up, rather than for rent.