An investor divides a property’s annual rental income by its value and finds the result is 5 percent. That figure is the rental yield. It expresses income as a percentage of the property’s price or current value.

Gross yield uses total rent before expenses; net yield subtracts operating costs. Yield helps compare income properties across markets and price points. High-yield markets often carry higher risk or lower appreciation expectations; low-yield markets may offer stronger growth prospects.

Yield calculations should use realistic rents and current values. Overly optimistic assumptions produce inflated yields that will not materialize. Investors watch yield trends as interest rates and property prices move. A sustainable rental yield is one that survives vacancy, maintenance, and realistic expenses.

Yield tells you what the income alone is returning relative to the capital tied up.