Gross vs Net Rental Yield: How to Calculate It Before You Buy

Two listings can both advertise a 7% yield and deliver very different returns. The difference is usually in what is, and is not, counted.

This guide explains gross and net rental yield with a worked example, so you can compare properties in any city on the same basis.

Gross yield: the quick number

Gross rental yield is the annual rent divided by the purchase price, shown as a percentage. If a property costs 1,000,000 and earns 60,000 a year in rent, the gross yield is 6%. It is a fast way to compare listings, and it is the figure most adverts quote.

Net yield: the number you actually keep

Net yield subtracts the running costs of owning the property from the rent before dividing by the price. Costs commonly include:

Service charges or maintenance fees.
Property management fees, if you use an agent.
Insurance.
Periods when the property is empty between tenants.
Repairs and replacement of furnishings.
Taxes and fees that apply in your country and the property's country.

Using the same example, if costs and vacancy take 15,000 off the 60,000 rent, you keep 45,000. The net yield is 4.5%. The difference between 6% and 4.5% is large enough to change a decision.

Include the buying costs

The price you divide by should be the total you paid, not just the sticker price. Transfer or registration fees, agent fees, legal costs and any stamp or transfer taxes add to the real amount invested, which lowers the yield.

Check the rent assumption

Use rents from current, comparable listings or from official data, not from marketing.
Ask how long similar units take to let.
Be careful with "guaranteed" rent offers. Read what is guaranteed, for how long and who pays for it.

Yield is not the whole return

Yield describes income only. A property can have a high yield and a falling value, or a low yield and rising value. Currency movements can also change what you receive in your home currency. Treat any figure as an example, not a promise.

A simple checklist

Write down the total cost to buy.
Estimate rent from comparable listings.
List every yearly cost.
Allow for empty months.
Calculate gross and net yield and compare listings on net.

Why Choose Banke Properties?

Banke Properties lists and advises on property across Dubai, Abu Dhabi, Ras Al Khaimah, Doha, London and Mumbai, so a rental yield decision can be compared with the alternatives in one conversation. Our team explains the paperwork, the costs and the timelines in plain language, and tells you when a deal is not worth doing.

Talk to Banke Properties

If you would like help applying any of this to a specific home or investment, contact the Banke Properties team and tell us your budget, timeline and what you are trying to achieve.

Sources and disclaimer: Examples are illustrative figures chosen to show the arithmetic, not market data. Laws, fees and procedures change, and this article is general information, not legal, tax or financial advice. Please confirm current details with the relevant authority or a qualified professional before you commit money.

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