Formula used
Gross rental yield = monthly rent x 12 / current property value x 100. Net annual rent = monthly rent x (12 - vacancy months) - annual maintenance - annual property tax - other annual costs. Net yield = net annual rent / current property value x 100. The final illustration adds the appreciation assumption to net yield; it does not compound returns or include a sale.
Example calculation
For a property valued at Rs 50 lakh with Rs 20,000 monthly rent, one vacant month and Rs 40,000 total annual ownership costs: gross annual rent is Rs 2,40,000, rent after vacancy is Rs 2,20,000 and net annual rent is Rs 1,80,000. Gross yield is 4.8%; net yield is 3.6%. These are illustrative inputs, not a market benchmark.
How to use this calculator
- Enter a realistic current property value and the monthly rent you expect to collect.
- Enter expected vacant months over a year, including any gap between tenants.
- Add annual maintenance, property tax and other recurring costs once each.
- Read net yield alongside gross yield, then repeat with more vacancy or higher costs.
- Treat appreciation as a separate assumption. Compare loan costs and tax separately before deciding whether to keep or sell.
Important assumptions
- Rent and recurring expenses are constant during the modelled year; partial vacancy months reduce rent proportionately.
- Property value must be positive. This tool uses the value you enter and does not obtain a valuation or local rental quote.
- Net yield here is before personal income tax and financing costs. EMI, loan interest, purchase stamp duty, registration, sale costs and capital-gains tax are not deducted automatically.
- Yield plus appreciation is a simple illustration, not a forecast, an IRR or cash you can spend. Property prices can fall.
Common mistakes to avoid
- Mixing monthly rent with annual expense figures.
- Counting the same maintenance bill under both annual maintenance and other costs.
- Calling gross yield take-home income, or ignoring vacant months.
- Comparing a pre-tax, unlevered property yield with an after-tax or leveraged investment return.
How one extra vacant month changes net yield
Using the worked example, a second vacant month lowers rent after vacancy from Rs 2,20,000 to Rs 2,00,000. With the same Rs 40,000 costs, net rent becomes Rs 1,60,000 and net yield falls from 3.6% to 3.2%. This isolates vacancy risk; it does not assume that rent or property value will stay unchanged.
Using yield for a hold-or-sell comparison
Current value answers what the rental cash flow earns on the property value today. Your original purchase cost answers a different question about your invested cost. Use a consistent denominator for comparisons, and separately account for sale costs, taxes, loan balance and the income you would give up. A high yield alone does not establish that a property is a good investment.