Gross Yield vs Net Yield: What Is the Difference?

Gross yield compares annual rent with purchase price before costs, while net yield accounts for expenses and can give a more realistic view of income performance.

Quick answer

The supplied E.R.E guidance explains that gross yield excludes associated costs, while net yield considers costs such as tax, mortgage interest and maintenance.

Why this metric or concept matters

Property investors need a consistent way to compare opportunities. Headline figures can be useful for screening, but they should be read alongside the assumptions, costs, time period, financing structure and risks behind them.

How to use it when comparing property

Use the same calculation method and assumptions across every development you compare. Check whether figures are gross or net, whether they are historic, current or projected, what costs are excluded, and whether currency movements could affect your result.

What investors often overlook

Purchase costs, taxes, legal fees, finance costs, management, maintenance, service charges, void periods and resale costs can materially change an investment outcome. A strong headline percentage does not by itself establish that an opportunity is suitable.

Due diligence before investing

Verify material figures against the development documentation and obtain appropriate legal, tax and financial advice where required. Consider the developer, contract, ownership structure, payment schedule, local market, rental assumptions and realistic exit options.

Key points to consider

• Gross yield is useful for a quick first comparison
• Gross yield formula: annual rental income ÷ purchase price × 100
• Net yield deducts annual expenses before comparing with purchase price
• Costs can include tax, mortgage interest and maintenance
• Use the same assumptions when comparing properties

How to use this guide

Use this page as a starting point for your research, then check the information against the specific development, destination and transaction you are considering. Property information and rules can change, and the right decision depends on individual circumstances.

Explore related E.R.E resources

Continue your research through the E.R.E Property Knowledge Base, compare property investment destinations, or review the latest property developments. Developers who want to discuss a project can contact E.R.E Property.

This page provides general information only. It is not legal, tax, mortgage or financial advice.