Rental yield is a real estate metric that measures the amount of cash generated by a property as a percentage of the property price or market value. It is a tool used by real estate investors to analyze the potential profitability of a property. There are two types of rental yield: gross rental yield and net rental yield.

• Gross rental yield compares gross rental income to property value or asking price. It is the return on investment before expenses and vacancies are taken into account. Gross rental yield is a good screening tool to choose properties that generate higher amounts of rental income compared to the property value.

• Net rental yield compares net operating income to property value or asking price. It is a calculation used to measure the potential return from a property once operating expenses have been factored in. Net rental yield is calculated by subtracting anticipated expenses from the gross rental income and dividing the result by the property value.

A high rental yield is generally desirable, but it is not the only factor to consider when investing in real estate. The best investors also consider other factors such as location, property condition, and potential for appreciation.