Investment & yield
Gross Yield
Gross yield is annual rental income divided by the property's purchase price, expressed as a percentage before any costs.
Gross rental yield is a quick headline measure of income return, calculated as yearly rent divided by the price paid (or current value) and multiplied by 100. It ignores service charges, maintenance, management fees, vacancy, and financing costs, so it overstates the actual return an investor keeps. It is useful for comparing properties at a glance, but net yield gives a truer picture of profitability.
Related terms
- Net Yield — Net yield is annual rental income minus operating costs, divided by the property's value, giving a truer measure of return than gross yield.
- ROI (Return on Investment) — ROI measures the total gain from a property relative to what was invested, combining rental income and any change in value.
- Price per Square Foot — Price per square foot is a property's price divided by its area, used to compare value across units of different sizes.
- Capital Appreciation — Capital appreciation is the increase in a property's market value over time, realised as profit when it is sold for more than it cost.