Rental Yield That Survives Reality: A Net Income Worksheet

Gross rental yield is useful for a quick comparison, but it is not the return that reaches your account. Two homes with the same price and rent can produce very different outcomes once vacancy, society charges, furnishing replacement and acquisition costs are included.

Step 1: estimate collected rent

Start with expected monthly rent multiplied by occupied months, not automatically twelve. Use a vacancy assumption that reflects tenant turnover and demand in that exact micro-market. Add other dependable income only when it is contractually and practically collectable.

Step 2: subtract owner-paid operating costs

• Society maintenance or sinking-fund contributions paid by the owner.
• Property tax and insurance.
• Routine repairs and an annual reserve for larger replacements.
• Brokerage or tenant-acquisition expense spread across the tenancy.
• Professional management, legal documentation and inspection costs.
• Utilities paid during vacancy.

Step 3: use the capital actually committed

For an unleveraged comparison, the denominator can include purchase price plus stamp duty, registration, brokerage, immediately required repairs and furnishing. Keep financing analysis separate: loan interest and principal affect cash flow differently and depend on your borrowing terms.

Run three scenarios

1. Base case: normal vacancy and maintenance.
2. Stress case: longer vacancy plus one material repair.
3. Improvement case: justified rent increase after a targeted upgrade.

Yield is only one dimension. Liquidity, tenant depth, building condition, legal clarity and concentration of your wealth matter too. Tax treatment is personal and can change; use current official guidance and a qualified tax adviser rather than copying an old online calculation.