Frequently Asked Questions
Rental yield is a percentage showing the income generated from a rental property compared to its cost. It helps investors assess profitability and compare investments.
Property taxes are a significant operating expense, directly reducing your net annual rental income and, therefore, your net rental yield.
Not always. A high yield could indicate higher risk, a less desirable area, or a property with high maintenance needs. Balance yield with location and property quality.
Vacancy periods, unexpected repairs, higher-than-expected property management fees, and rising insurance costs are common hidden costs.
No, rental yield focuses solely on rental income versus cost. Capital appreciation (property value increase) is a separate but important aspect of real estate investment returns.
Yes, it’s wise to factor in an estimated vacancy rate (e.g., 5-10% of annual rent) to get a more realistic net rental yield.
A mortgage doesn’t directly affect gross or net rental yield (which are based on total property cost). However, it does impact your cash-on-cash return, as this metric focuses on the return on your actual cash invested (down payment).
