Gross rental yield is a quick way to compare rental income with a property's purchase price. It is a screening number, not a complete investment return.
The gross-yield formula
Multiply monthly rent by 12 to estimate annual rent, then divide by the property price and multiply by 100. Use the same currency for both inputs.
Costs beyond the yield
Vacancy, repairs, insurance, taxes, financing, management and closing costs can reduce the cash return. A property with a higher gross yield may still have higher operating costs.
Compare like with like
Use the same rent definition and property value basis across properties. Ask for actual expenses and verify local rental rules before making an offer.
- Run a vacancy scenario.
- Separate gross yield from cash-on-cash return.
- Budget maintenance and capital repairs.
Frequently asked questions
Is gross rental yield the same as ROI?
No. Gross yield uses rent and price only. ROI should account for expenses, financing, taxes, appreciation and the cash invested.
Should I use expected or current rent?
Use verified current rent for a baseline and run a separate scenario for an expected rent change.