Free tool
Rental yield calculator
Gross yield is the number in the listing. Net yield — after empty weeks, maintenance, tax and the stamp duty you paid to get in — is the number worth deciding on, and it is a lot smaller.
Gross yield
3.75%
Annual rent ÷ property value — the listing number
Net yield
1.88%
After vacancy and costs, against the all-in purchase price
Costs — the gap between gross and net
If you borrow to buy it
Cash flow each month
−₹41,977
You top it up every month
Cash you put in
₹22,40,000
Return on that cash
-22.49%
Before any price appreciation
Residential yields in Indian cities are commonly around 2-4% gross, and lower once costs come out — which is why buying to let here is usually a bet on the price rising rather than on the rent. Net yield here is before income tax on the rent.
Estimates for planning only, not financial advice. Lenders may round figures slightly differently.
Gross, net and cash flow
Gross yield = annual rent ÷ property value × 100
Net yield = (rent collected − running costs) ÷ all-in cost × 100
The all-in cost is what you actually paid: the price plus stamp duty, registration and brokerage. Take a ₹80,00,000 flat let at ₹25,000 a month. Gross yield is 3.75%. Allow four empty weeks, the agent's cut, ₹4,000 of society maintenance, property tax and repairs, and measure it against the ₹86,40,000 it really cost — net yield is 1.88%.
Cash flow is a third question again. Buy the same flat with a ₹64,00,000 loan and the rent does not cover the EMI: you would put in about ₹41,977 every month. Bought outright, it pays you ₹13,564 a month instead.
Why Indian yields look low
Residential yields in Indian cities commonly sit around 2-4% gross, well below a fixed deposit. That is not a quirk of your shortlist; it is the market. Prices are set by buyers who expect capital appreciation, while rents are set by what tenants can pay monthly, and the two have drifted apart in most metros.
Three consequences worth being clear-eyed about:
- A let property is usually a bet on the price, not on the rent. If prices stall, the yield alone rarely justifies the purchase.
- Leverage cuts both ways. A loan magnifies appreciation and also guarantees a monthly outflow while the rent lags the EMI.
- Commercial and smaller-city residential often yield more — with their own risks: longer vacancies, fussier tenants, thinner resale markets.
What this leaves out
Income tax on rent. Rental income is taxable at your slab, with a 30% standard deduction and a set-off for home-loan interest under rules that change. Net yield here is before tax, so your figure will be lower — and the loan interest set-off softens that.
Appreciation. Yield is only half the return. For the whole picture — rent, price growth, costs and the alternative of investing instead — use the rent vs buy calculator, and the EMI calculator for what the loan itself costs.
Questions people ask
What is a good rental yield in India?
In metro residential, anything above roughly 3.5% net is unusually good; 2-3% gross is common. Compare it against what the same money would earn elsewhere, and remember that a let property also carries vacancy, tenant and liquidity risk.
Should I use the price I paid or today's value?
Both, for different questions. Against what you paid, it tells you whether the purchase was sound. Against today's value, it tells you whether keeping it let is still the best use of that money — which is the more useful question once prices have moved.
Why is my cash flow negative when the yield looks fine?
Because an EMI repays principal as well as interest, so it is larger than the interest cost alone. Negative cash flow is not automatically a bad deal — part of that outflow is buying you equity — but it is money you must have every month.
Does this include income tax on rent?
No. Rental income is taxed at your slab after a 30% standard deduction, with home-loan interest set off under rules that change. Treat the net yield here as before tax.
More free tools: EMI calculator · SIP calculator · Goal savings calculator · Emergency fund calculator · Rent vs buy calculator · Savings rate calculator · Life in weeks
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