Rental yield is the annual rental income from a property expressed as a percentage of its value. Gross yield equals annual rent divided by property value, while net yield first deducts the costs that cannot be passed on to tenants.
Why it matters
Yield is a common way to describe the income a real estate fund earns from its properties. It is not the same as the fund's return, which also reflects fund costs, changes in property valuations and the effect of borrowing.
What to watch for
A high yield can signal higher risk, such as a weaker location, a less secure tenant or a short remaining lease. Check whether a quoted figure is gross or net and which costs it leaves out. See rental yields explained and vacancy.
General information. Not investment advice or a suitability assessment.
