Calculate rental property yield
Gross Yield = (Annual Rent ÷ Property Price) × 100. Net Yield = (Annual Rent - Expenses) ÷ Property Price × 100. Expenses include maintenance, property tax, insurance, and vacancy periods.
In India, rental yields are typically 2-4%. Major metros like Mumbai/Delhi often see 2-3%, while smaller cities may offer 3-4%. Compare against fixed deposit rates (6-7%) when evaluating.
Buy below market value, in high-demand rental areas, furnish smartly for higher rent, minimize vacancy with good tenant relations, and control maintenance costs. Location choice is most critical.
Low yields (2-3%) make pure income play challenging in India. Real estate works better for appreciation + rental combination. Consider REITs for better liquidity and diversification.
Cash-on-Cash = Annual Cash Flow ÷ Cash Invested × 100. If you put ₹20 lakh down and net ₹1.5 lakh/year after EMI, return = 7.5%. Better for leveraged investments than simple rental yield.
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