How gross yield differs from net, which costs eat into profit, and why occupancy matters more than a headline figure.
Rental yield is the headline argument in any property pitch — and the one most often presented misleadingly. Here is how to work it out yourself.
Gross yield is annual rental income divided by the purchase price. Simple, but deceptive: it ignores costs. Net yield subtracts taxes, management, insurance, maintenance, vacancy and fees — and is usually noticeably lower.
The decisive factor is real occupancy. A holiday let may show a high nightly rate yet only work a few months a year; long-term rental in a major city is steadier, even at a modest rate. Model the conservative scenario, not the ideal one.
Factor in entry costs (purchase tax, notary, fees) and exit costs (capital gains tax, sale commission) too — they affect your overall return more than people expect. All yield figures are indicative and not a guarantee.