Close your eyes and imagine… You've worked day and night for years, had to kill your desires, and saved money so you could buy a good property. Your dream is that this house will now work for you and generate a fixed passive income every month. But is just buying the house enough?

This is where people make a mistake. They get emotional and buy the property, but later they find that the rent they're getting isn't even covering the expenses. It's like “bought an elephant, but have no money to feed it.” To clear up this confusion, you need a rental yield calculator, which shows you the right numbers, free from emotion, so you can accurately estimate the future profits and losses.

What is Rental Yield?

If we talk about what rental yield is, it's the percentage that tells you how much rent you are getting or can get each year in return for the money you have invested in a property. In a way, it's like a “Report Card” for your property.

What is a Good Rental Yield?

If we talk about the Indian market, a yield of 2% to 4% is considered normal for residential properties (homes). However, for commercial properties (shops or offices), this can range from 6% to 9%, but it depends on the location.

Factors That Influence Rental Yield

• Location: This is the biggest factor! You always get a higher yield near a metro station or an IT hub.
• Property Type: 1BHK and 2BHK apartments are in higher demand, so they have fewer vacancies.
• Maintenance Cost: Older buildings have higher expenses, which can reduce your profit.
• Market Demand: When job growth in the local market increases, rents automatically start to rise.

How do you calculate rental yield?

The method to calculate your rental yield is very simple:

• First, add up your total annual rent.
• Divide it by the total cost of the property you purchased.
• Then, multiply by 100.

But if you're buying a home with a mortgage, you should use a rental yield calculator with mortgage, because it also calculates interest.

Important Questions (The 4% Rule & More)

What is the rule for a 4% rental yield? Many experts believe that if your yield is 4% or more, it can be a profitable residential investment for you. And if it's below that, it becomes a bit difficult to beat inflation and maintenance.

Is a 3.6% rental yield good? In India's metro cities like Mumbai or Delhi, a 3.6% yield is considered quite decent. It's not bad, but you also need to pay attention to property appreciation.

Who is this for and why is it necessary?

This calculator is very important for those who:

• Are planning to buy a new property in the near future.
• Or want to check the performance of their existing property.
• Are real estate investors comparing different properties.

It's also important for you to use this so you can avoid a “Bad Investment.” Investing without looking at the numbers is like shooting in the dark.

Benefits of using this tool

• Quick Decisions: Get results in seconds.
• Comparison: Easily compare the yields of two different areas (e.g., Navi Mumbai vs. Thane).
• Net Profit: This doesn't just show the surface-level profit, but the monthly rental yield calculator result after deducting expenses.

For a deeper understanding of investments, you can visit the Income Tax Department of India's website to read about the taxes levied on property income, so you can easily calculate your exact net profit.

Frequently Asked Questions