What is Rental Yield?
The most important number every property investor must know — and how to calculate it in 10 seconds.
TL;DR
Rental yield is the annual rental income from a property expressed as a percentage of its market value. Formula: (Annual Rent ÷ Property Value) × 100. A property worth ₹50 lakhs earning ₹2.4 lakhs/year has a 4.8% gross yield. In India, 3-5% is average for residential, 6-10% for commercial.
The Formula
Gross Rental Yield = (Annual Rent ÷ Property Value) × 100
Example
You buy a flat in Bangalore for ₹50,00,000. You rent it out for ₹20,000/month.
- Annual Rent = ₹20,000 × 12 = ₹2,40,000
- Gross Yield = (2,40,000 ÷ 50,00,000) × 100 = 4.8%
Gross vs Net Rental Yield
Gross yield uses the raw rent figure. Net yield subtracts ongoing expenses:
- Maintenance and repairs
- Property tax
- Insurance premiums
- Property management fees
- Vacancy periods (months the unit is empty)
Net yield is typically 1-2% lower than gross yield and gives you a more realistic picture of actual returns.
Average Rental Yields by Indian City (2026)
| City | Residential | Commercial |
|---|---|---|
| Mumbai | 2–3% | 6–8% |
| Bangalore | 3.5–4.5% | 7–9% |
| Pune | 3–4% | 7–9% |
| Delhi NCR | 2.5–3.5% | 6–8% |
| Hyderabad | 3.5–4.5% | 7–10% |
| Ahmedabad | 3–4.5% | 7–9% |
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