Understanding Rental Yield
Short answer: Rental yield is the annual rental income expressed as a percentage of the property value or total investment cost; gross yield uses rent only, while net yield subtracts operating expenses.
Key takeaways
- Gross yield for screening; net yield for decisions
- Stress-test vacancy and maintenance
- Benchmark within the same micro-market
Gross vs net yield
Investors often quote gross yield for quick screening but should decide on net yield after realistic costs.
- Gross yield = (Annual rent ÷ Purchase price) × 100
- Net yield = ((Annual rent − Operating costs) ÷ Total investment) × 100
- Operating costs: management, maintenance, tax, vacancy allowance
What is a “good” yield?
Acceptable yield depends on country, currency, risk, and appreciation expectations. High yields may signal higher vacancy or weaker capital growth.
- Compare yields within the same city and asset class
- Stress-test with 1–2 months vacancy per year
- Align yield targets with financing cost
Yield in ARDH reports
Premium ARDH evaluations can include ROI and rental projections where inputs support them, alongside location and market context from OpenStreetMap and listing data.
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