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What is Yield?

Yield in real estate refers to the return on investment generated from a property, usually expressed as a percentage of the property’s value or purchase price. It primarily measures the income earned from rental income relative to the property’s cost or market value.

Types of Yield in Real Estate

1. Gross Yield

Gross yield measures rental income before deducting any expenses.

Formula:

(Annual Rental Income ÷ Property Value) × 100

Example:
If a property earns ₹2,00,000 per year and is worth ₹20,00,000, the gross yield is 10%.

2. Net Yield

Net yield considers expenses such as maintenance, taxes, and management fees.

Formula:

(Annual Rental Income – Expenses) ÷ Property Value × 100

This provides a more realistic picture of actual returns.

Key Features of Yield in Real Estate

  • Income-based metric: Focuses on rental earnings
  • Percentage representation: Makes comparison across properties easier
  • Investment performance indicator: Helps assess profitability
  • Widely applicable: Used in both residential and commercial real estate

Yield is a key indicator in real estate that measures how efficiently a property generates rental income relative to its value. It helps investors understand cash flow potential and compare different investment opportunities.

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