Rental yield — the net number
Gross yield is the number in the pitch. This is the net one, after vacancy, maintenance, tax, repairs and re-letting — divided by what was really invested.
Your numbers
| Total investedPrice plus duties, legal, brokerage and the fit-out. | — |
| Gross annual rent | — |
| Annual costs | — |
| Net annual income | — |
| Net yield on price aloneHigher than the honest figure, because it ignores what acquisition cost. | — |
| Monthly gap after the EMINegative means the investor funds this from income every month. Say it out loud before they buy. | — |
Gross yield is annual rent divided by price. It is in every listing and it is close to meaningless on its own.
Net yield subtracts what ownership costs — society maintenance, property tax, a realistic repairs allowance, the months the flat sits empty, and the brokerage paid each time a tenant changes — and divides by what was really invested, including stamp duty, registration and the fit-out that made it rentable.
The gap is usually large, and showing it honestly is one of the fastest ways to become the agent an investor trusts.
Both halves of the fraction move against you
The numerator falls because of vacancy, maintenance, tax, repairs and the brokerage paid on each re-letting. The denominator rises because stamp duty, registration, legal fees and the fit-out are all part of what was actually invested.
That is why the net figure typically lands well under half the gross. It is the normal outcome, not a pessimistic scenario.
Worked example
₹80 lakh flat, ₹7.4 lakh of duties and fees, ₹4 lakh fit-out — ₹91.4 lakh invested. Rent ₹22,000 gives ₹2.64 lakh gross, a 3.3% gross yield on price.
Subtract one month vacancy (₹22,000), maintenance (₹42,000), property tax (₹9,000), repairs (₹15,000) and re-letting brokerage averaged over two years (₹11,000) — ₹99,000 of costs. Net income is ₹1.65 lakh, and on ₹91.4 lakh invested that is about 1.81%.
Gross 3.3%, net 1.81%. Both numbers describe the same flat.
The conversation to have
Residential yields in most Indian cities are modest, and net yields lower still. That is normal — Indian residential property has historically been bought for capital appreciation, with rent partly offsetting the holding cost.
That is a legitimate thesis. It is a different thesis from "the rent pays for it", and the two behave completely differently in a flat market. Be clear which one your client is buying, and if the EMI exceeds the net rent, put the monthly gap in front of them explicitly.
Not investment advice. Yields, costs and tax treatment vary by city, property and circumstance.
Questions
What is a good rental yield in India?
Residential gross yields in most Indian cities are modest by global standards and net yields are lower still. Rather than chasing a target number, compare properties against each other on the same net basis.
Should the loan be in the yield calculation?
No — yield measures the property, not the financing. The monthly gap line is separate and answers a different question: how much the investor funds out of pocket each month.
Why does re-letting brokerage appear as an annual cost?
Because it recurs. A month's rent paid every two years is half a month's rent every year, and leaving it out flatters the return of any property with normal tenant turnover.
The number convinces. The reel gets you the call.
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