Rental yield calculator

Gross yield is annual rent divided by purchase price. It is the figure quoted in listings and marketing brochures, because it is the flattering one. It assumes the property is occupied every day of the year and costs nothing to own, neither of which is true.

Net yield divides income after running costs by the total actually invested — purchase price plus the transfer fees, commission, legal and registration costs that get paid on completion. The gap between the two is routinely two percentage points or more, which is the difference between an investment that works and one that does not.

When an investor asks what a property yields, they usually mean gross and should mean net. Quoting net builds more trust than quoting the bigger number and being corrected later.

Purchase costs vary enormously by market and are the most commonly omitted input. In Dubai, transfer fees and registration typically add around 4% plus agency commission. In France, frais de notaire on an existing property run to roughly 7–8%. In Spain, transfer tax varies by region and can exceed 10%. In Thailand, transfer fees and specific business tax depend on how long the seller has held the property.

Because these costs are paid up front and never recovered, they belong in the denominator of any honest yield calculation. Leaving them out inflates the result by exactly the amount that most affects a first-time investor's actual return.

Yield prices risk. A 4% net yield on a prime apartment in a liquid market and a 9% net yield on secondary stock in a thin one are not simply better and worse — they are different trades, one weighted toward capital preservation and the other toward income.

What matters more than the absolute number is comparing like with like inside one market, and stress-testing the inputs. Raise the vacancy allowance to 10% and add 20% to running costs: if the deal still works, it is probably robust. If it only works at full occupancy and optimistic costs, it is not an investment, it is a hope.