What is rental yield and how is it calculated
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Rental yield is typically calculated using this formula:
Rental Yield (%) = (Annual Rental Income ÷ Property Value) × 100
For example, if a property costs Rs.50,00,000 and generates Rs.3,00,000 per year in rent:
Rental Yield = (3,00,000 ÷ 50,00,000) × 100 = 6%
There are two types of rental yield:
Gross Rental Yield – Based only on rental income and property price.
Net Rental Yield – Accounts for maintenance, taxes, insurance, and other expenses.
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