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Gross Rental Yield
4.7%
Net Rental Yield
4.5%
Rental Yield Analysis
Good
PAYBACK PERIOD
22years 2months
What is Rental Yield?
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Gross vs Net Rental Yield: What’s The Difference?
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Understanding Rental Yield for Property Investments in India
Rental yield is one of the most important metrics for evaluating the profitability of a real estate investment. It measures the annual rental income you earn from a property as a percentage of its market value. For investors, knowing the rental yield helps in comparing properties, assessing returns, and making smarter investment decisions.
How is Rental Yield Calculated?
In India, rental yield is typically expressed as a percentage and calculated using the formula:
Rental Yield (%) = (Annual Rental Income ÷ Property Value) × 100
For example, if you purchase a property worth ₹50 lakh and earn ₹15,000 per month in rent (₹1.8 lakh annually), your rental yield will be:
(1,80,000 ÷ 50,00,000) × 100 = 3.6%
Factors Influencing Rental Yield
Several factors determine how high or low your rental yield can be. These include:
1. Location of the property: Properties in prime city areas generally have lower yields due to high purchase prices, while suburban or emerging localities may offer better returns.
2. Type of property: Residential apartments usually have yields of 2–4%, whereas commercial properties can offer 6–9% or higher.
3. Demand and supply: Areas with high rental demand, such as near business hubs, IT parks, or universities, often yield better rental returns.
4. Amenities and facilities: Properties with modern amenities (security, parking, gym, clubhouse) attract higher rent, improving yield.
5. Property maintenance and age: Well-maintained, newer properties fetch better rent compared to older units.
Why Rental Yield Matters
• For investors: Helps evaluate the return on investment compared to other options like mutual funds or fixed deposits.
• For homebuyers: Indicates whether a property can generate passive income to offset EMIs or ownership costs.
• For landlords: Guides rental pricing strategy to stay competitive while maximizing returns.
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