What is a good rental yield? A gross rental yield of around 3–5% is typical for residential property in many Indian cities, and anything above roughly 5% is generally considered good. Yield is the annual rent expressed as a percentage of the property's value, so a higher figure means stronger rental income relative to price.
Rental yield shows how hard your property works as an income asset — the annual rent as a percentage of what the property is worth. It lets you compare very different properties on a level footing.
Rental yield ranges
| Rental yield | Rating | What it means |
|---|---|---|
| Above 5% | Good | Strong rental income relative to price. |
| 3–5% | Typical | Common for residential property in big cities. |
| 2–3% | Low | Income is modest; you are banking on price growth. |
| Below 2% | Weak | Rent barely covers costs; review the investment. |
What affects your rental yield
- Purchase price — a lower price lifts the yield
- Monthly rent — higher achievable rent raises yield
- Location — rental demand and price levels vary widely
- Maintenance and costs — net yield is lower than gross
- Vacancy — empty months reduce real income
How to improve it
- Compare net yield (after costs), not just gross
- Look at areas with strong rental demand
- Negotiate the purchase price — it drives yield directly
- Keep vacancy low with good tenants and upkeep
Work out your own numbers — the Rental Yield Calculator does it instantly, for free, with the formula and a worked example built in.
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