What is Rental Yield?

What is Rental Yield?

Rental Yield measures the annual rental income relative to an asset’s purchase price or current market value, gauging how well occupant payments cover or exceed ownership costs. Commonly expressed as a percentage, a higher yield suggests a lucrative or stable revenue stream, while lower yields might indicate tepid occupant demand or a high purchase cost.

• Gross vs. Net: Gross yield omits maintenance, taxes, or insurance; net yield factors them in.
• Price Considerations: Larger capital outlays can flatten yields if occupant rates stay modest.
• Geographical Influence: Prime locales command higher occupant fees, boosting yields.
• Comparative Benchmark: Allows owners to gauge viability against alternative investments.

Monitoring yields is fundamental for deciding occupancy rates, potential rent hikes, or exploring whether a property meets target returns.