Net Rental Yield

Frequently asked questions

What is a good net rental yield for a rental property?

In Dubai, a net rental yield above 5% is considered strong, with popular areas like Jumeirah Village Circle averaging 6 to 7%. In the US, investors typically target 4 to 6% net yield, while Indian metros like Bengaluru and Pune tend to deliver 2 to 3%. Net yield varies widely by asset class, so always compare within the same market and property type.

How do you calculate net rental yield?

The formula is: (Annual Rent minus Annual Operating Expenses) divided by Property Value, multiplied by 100. For example, if a property earns AED 120,000 in rent per year, costs AED 25,000 in service charges, maintenance, and insurance, and is valued at AED 1,800,000, the net yield is (95,000 / 1,800,000) × 100 = 5.28%. Always use market value rather than purchase price when comparing across properties.

What is the difference between net rental yield and gross rental yield?

Gross yield ignores all expenses and simply divides annual rent by property value, making it quick to calculate but misleading as a profitability measure. Net yield subtracts operating costs first, giving you the actual cash return. A property with a 7% gross yield and high service charges might deliver only 4% net, which changes the investment decision entirely.

Does net rental yield include mortgage payments?

No. Net rental yield is a property-level metric that excludes financing costs such as EMI payments. This makes it comparable across investors regardless of how much leverage they use. If you want to measure the return on your actual cash outlay including mortgage costs, use cash-on-cash return instead. IONROI calculates both metrics so you can see the full picture side by side.