Net Yield vs Gross Yield. Why you shouldn’t be lured in by Gross!

February 22, 2024

It is very easy for Property Investment companies to lure you into a bad deal by selling you it based on a Gross Yield. To ensure that we are 100% transparent with our investors we always focus on the NET yields, as that is the money you will see!

Gross Yield:

• This is the simpler calculation, reflecting the total annual rental income as a percentage of the property’s purchase price.
• It’s like looking at the gross revenue without considering any costs.
• It can be a good starting point for comparing different investments at a glance, but it doesn’t give you the full picture.

Net Yield:

• This represents the actual profit you make after accounting for expenses associated with the property.
• It subtracts things like taxes, insurance, maintenance, repairs, property management fees, and vacancies from the gross rental income.
• It provides a more realistic picture of your potential return and is generally considered the more accurate measure for investment decisions.

Key Points to Remember:

• Net Yield is generally lower than Gross Yield because it factors in expenses.

• Net Yield is the preferred metric for evaluating investments as it reflects the actual return you receive.

• Gross Yield can still be useful for initial comparisons but don’t rely solely on it for decision-making.