Finance · Free tool
Rental Yield Calculator
Indian residential rental yields hover at 2-3% in metros — well below FD rates. Use this to check whether buying-to-rent makes sense or if you're better off in fixed income.
Society dues, repairs, vacancy buffer.
Compare to FD ~7% or equity ~12%. Yield alone undervalues real estate — capital appreciation matters.
How it works
Gross yield = annual rent ÷ property value. Net yield deducts maintenance (~₹2.5–₹4/sqft/month for societies), property tax, insurance, and a vacancy allowance (1 month/year is typical in India). For a fair comparison vs FD, also subtract the opportunity cost of stamp duty + registration paid upfront (5–8% of property value) amortised over your holding horizon.
Worked example
A ₹1.5 crore 2BHK in Andheri West, Mumbai rents for ₹45,000/month = ₹5.4 lakh/year. Gross yield = 5.4 ÷ 150 = 3.6%. Subtract society maintenance ₹4,000/month, property tax ₹15,000/year, 1 month vacancy and 5% management cost: net rent ~₹4.32 lakh. Net yield = 2.88%. Versus 7.1% on an SBI FD or 6.1% on Embassy REIT (both with no maintenance hassle), the direct-property route only makes sense if you expect 5%+ annual capital appreciation.
When to use this
- Deciding between buying a flat to rent vs investing the down-payment in equity/debt
- Comparing yields across Mumbai (2–3%), Bengaluru (3–4%), Hyderabad (3.5–4.5%), Pune (3–4%)
- NRIs evaluating a flat purchase under FEMA repatriation rules
- Landlords negotiating rent revisions on existing tenancies
For passive real-estate exposure without owning the asset, use the REIT / InvIT yield calculator. To compute EMI on the loan, see the EMI calculator.
FAQ
Why are Indian rental yields so low?
Property prices in metros are 30-50× annual rent (vs 15-20× in mature markets). The market prices in expected capital appreciation, not just rental income. Mumbai, Bangalore, NCR yields are 2-3%.
Is rental yield enough to justify a buy-to-let?
On its own, no — FDs at 7% beat 3% net yield. The thesis must include capital appreciation. Historical average is ~5-6% appreciation, total return ~8-9%.
Should I include EMI in cost?
For yield: no — yield is property-vs-market. For cashflow analysis: yes — your monthly outflow is EMI + taxes + maintenance, vs inflow of rent.