Gross vs. net rental yield, explained
Why the number quoted in a listing is rarely the number you'll actually earn.
The rental yield quoted in a property listing or a broker’s pitch is almost always the gross figure — annual rent divided by the property’s value, nothing else. It’s the simplest number to calculate and quote, and also the most optimistic one, since it quietly assumes the property is rented every single month with zero ownership costs.
What the headline number leaves out
Two things separate gross yield from what you actually pocket: vacancy, the months a property sits empty between tenants, and expenses — property tax, maintenance, insurance, and society charges. Neither shows up in the gross figure, even though both are a normal, recurring part of owning a rental property.
The gap between gross and net
Using the Rental Yield Calculator’s own defaults — a ₹60,00,000 property renting for ₹20,000/month, with 1 month of vacancy a year and 1% of the property’s value in annual expenses — the gross yield is a clean 4.00% (₹2,40,000 a year). Once vacancy trims collected rent to 11 months and ₹60,000 in expenses is subtracted, actual net income is only ₹1,60,000 — a net yield of 2.67%. The headline number overstates your real annual income by ₹80,000, exactly a third less than what the 4% figure implies.
Work out the annual rental yield you're earning on a property.
Why net is the number that actually matters
Gross yield is useful as a fast, back-of-envelope way to screen properties against each other, since it’s cheap to calculate from a listing price and quoted rent alone. But it isn’t comparable to the yield on almost any other investment, which is typically quoted after costs. When you’re weighing a rental property against a fixed deposit, a bond, or a dividend-paying stock, the net figure — not the gross one — is the fair, apples-to-apples comparison.
Ask for or estimate the specific expense figures — property tax, society maintenance, typical vacancy in that micro-market — rather than accepting a single quoted yield at face value. Two properties with an identical 4% gross yield can have meaningfully different net yields depending on how well-maintained the building is and how easily it re-lets between tenants.
All figures are indicative and for educational purposes only — not financial advice.
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