Rental yield is the annual rental income as a percentage of the property value. Gross Rental Yield = (Annual Rent ÷ Property Value) × 100. Net Rental Yield deducts expenses like maintenance, property tax, insurance, and vacancy losses from the annual rent before dividing.

In Indian metros, gross rental yield typically ranges from 2-4%. A yield above 3% is considered good, and above 4% is excellent. Tier-2 cities and commercial properties often offer higher yields (4-7%). Compare the net yield against fixed deposit rates to assess if the investment is worthwhile.

Gross yield uses total annual rent divided by property price — it is a quick comparison metric. Net yield subtracts all expenses (maintenance, property tax, repairs, vacancy, insurance) from annual rent, giving a more accurate picture of actual returns. Net yield is typically 1-1.5% lower than gross yield.

Vacancy directly reduces your effective rental income. A property vacant for 2 months in a year has an 83% occupancy rate, reducing effective annual rent by ~17%. Budget for 1-2 months vacancy per year (8-17% vacancy rate) for realistic net yield calculations, especially for unfurnished properties.