Gross and net rental yield, in plain language

This guide explains how PROPIQ defines a calculation. Verify figures before any purchase.

Gross rental yield is annual gross rent divided by the purchase price, multiplied by 100. Rent here means the rent figure you type, before vacancy and before running costs. The purchase price is only the price. It does not automatically include fees.

Net rental yield starts from the same rent, then subtracts a vacancy allowance and annual operating costs. That remainder is divided by a denominator you choose: the purchase price, or the total capital cost. The two results answer different questions. A yield on price can look stronger than a yield on all the money a purchase actually ties up, because fees and other capital sit outside the price.

Neither formula knows whether your rent is achievable, whether the building will charge the service charge you typed, or what a lender will do. A negative result means the costs you entered are larger than the rent you entered. It is a property of those inputs, not a forecast.

Illustration, not a market observation: if annual rent were 100,000 and the price were 1,000,000, gross yield would be 10%. If vacancy were 5,000 and operating costs were 15,000, the numerator would be 80,000. On the price, that is 8%. On a total capital cost of 1,200,000, it is about 6.67%. These round numbers are a teaching example. They are not an Abu Dhabi yield, a building yield, or a promise.

Leave a cost blank in your notes when you do not know it. Do not type zero unless you mean zero. The calculators reject a price of zero rather than dividing by it.

The rental-yield tool on this site uses these definitions and labels the lines as assumptions. Confirm any real fee or rule with a qualified person and a current source.