In real estate investing, yield is a core performance metric. But while many talk about “high returns,” few understand the difference between Gross Yield and Net Yield – and this misunderstanding can lead to poor investment choices.
Let’s break it down.
What is Gross Yield?
Gross Yield is the percentage return on a property before accounting for any expenses. It’s calculated as:
Gross Yield (%) = (Annual Rental Income ÷ Property Value) × 100
✔ Simple to calculate
❌ Doesn’t reflect actual profits
What is Net Yield?
Net Yield represents your return after deducting property-related expenses such as:
- Maintenance & repairs
- Property tax
- Insurance
- Management fees
- Periods of vacancy
Net Yield (%) = (Net Annual Income ÷ Property Value) × 100
✔ More accurate
✔ Reflects real-world ROI
Why It Matters
In a booming yet volatile market like India, knowing your net yield can protect you from overpaying for low-return properties.
For example, a property in Mumbai may have a gross yield of 5.5%, but after society charges and taxes, the net yield could drop to just 3.8%.
In contrast, a property in Pune’s outskirts might offer a net yield of 5.2% despite a lower rental value – because of lower maintenance and better tenant demand.
Final Thoughts
Gross yield is for marketing. Net yield is for decision-making.
Whether you’re investing in residential flats, commercial spaces, or REITs, always analyse both metrics. Especially in 2025, where cost structures and ROI expectations are evolving across cities.
- Always compare apples to apples
- Demand transparency from brokers and sellers
- Choose net yield when calculating your long-term strategy
Want to learn more about smart real estate investing in India?
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