How to judge rental yield before you buy an investment flat

Investing 1 min read
Building exterior
Building exterior

Gross rental yield is the annual rent divided by the purchase price. A flat costing ₹1 Cr that rents for ₹30,000 a month has a gross yield of 3.6% a year. It is a starting point, not the final answer.

Deduct maintenance, property tax, vacancy months and any repairs to reach a net yield. Then compare it with your loan interest rate: if the loan costs more than the property earns, you are relying on price growth to make up the difference.

Look at several rent listings in the same building or locality, not just the highest one, and check how long similar flats stay vacant. Tenant demand near IT parks, colleges and hospitals tends to be steadier.

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