Property Yield (Rental Yield) Calculator
Key Takeaway
Residential rental yields in Indian metros average 2–4% gross, while commercial properties yield 7–10%. Net yield after property tax, maintenance, and vacancy costs is typically 1–2% lower than gross yield.
Property Yield Calculator
Compare the gross and net rental yield of a property investment.
Yield Output
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Based on your Property Yield (Rental Yield) Calculator, here are the tools you should try next:
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The Cold Truth About Rent
Many Indians buy a second house purely for rental income, assuming it's a great investment. But they rarely calculate the Net Rental Yield,the actual cash flow percentage generated by the asset after paying society maintenance, property taxes, and accounting for vacancy periods.
The ₹1 Crore Illusion: Uncle Sharma's Investment
He found a tenant paying ₹25,000 a month. He boasts to his friends that his property is a cash cow.
His nephew, a financial analyst, calculates the Net Rental Yield:
- Gross Annual Rent: ₹25,000 × 12 = ₹3,00,000
- Minus Annual Maintenance (₹5,000/mo): -₹60,000
- Minus Property Tax: -₹10,000
- **Net Annual Income:** **₹2,30,000**
Net Yield = (₹2.3L / ₹1 Crore) × 100 = **2.3% per year**.
Uncle Sharma is stunned. A simple Bank FD would have given him 7% (₹7 Lakhs a year) with zero tenant headaches. Real estate in India is a capital appreciation play; buying it *purely* for rental yield is mathematically terrible compared to commercial real estate or REITs.
The 2% Illusion: The Hidden Math of Indian Real Estate
Karan bought a 2BHK in Bangalore for ₹80 Lakhs, seeing it as a brilliant investment. He immediately rented it out for ₹20,000 a month. Earning ₹2.4 Lakhs a year in passive income felt like a major financial milestone.
But when a financial planner sat down with him, the reality was sobering. A ₹2.4 Lakh annual income on an ₹80 Lakh asset is a gross rental yield of exactly 3%. After deducting the society maintenance of ₹3,000/month, property taxes, and the cost of an annual coat of paint, his net yield plummeted to around 1.8%.
In India, residential rental yields are notoriously low, typically hovering between 1.5% and 3%. Many investors mistakenly believe that property appreciation will make up for the poor cash flow. But holding an illiquid asset that barely beats inflation after maintenance costs is a heavy drag on a portfolio.
If you are buying real estate purely for investment, you must calculate the net rental yield brutally. If the yield is less than 3%, you are relying entirely on market speculation for your returns. Always compare your property's net yield against a risk-free fixed deposit or an index fund before locking your capital away.
Frequently Asked Questions
What is a good rental yield in India?
In India, residential rental yields typically range between 2% to 3.5%. Commercial properties usually offer higher rental yields, ranging from 6% to 9% depending on the location and tenant quality.
How is rental yield calculated?
Gross Rental Yield is calculated as (Total Annual Rent / Property Value) × 100. Net Rental Yield subtracts expenses like maintenance, property tax, and insurance from the annual rent before dividing by the property value.
Why is rental yield important?
Rental yield helps investors evaluate the cash flow generation of a real estate investment relative to its price, making it easier to compare against other assets like fixed deposits or mutual funds.
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