How to calculate rental yield

Rental yield is a percentage that indicates the annual rental income of a Singapore property compared to its purchase price or total investment outlay.

To calculate gross rental yield:
- Divide the annual rental income by the purchase price of the property.
- Multiply the result by 100 to get the percentage.

For example, if a condominium is purchased for $1 million and generates $36,000 in annual rent, the gross rental yield is 3.6%.

For a more realistic assessment, calculate net rental yield:
- Subtract all yearly expenses (such as mortgage interest, property tax, maintenance fees, insurance, and agent commission) from the annual rental income.
- Divide the result by the total cash outlay (including stamp duties, renovation costs, legal fees, and any other upfront expenses).
- Multiply by 100 to express as a percentage.

A strong gross rental yield for Singapore properties typically ranges from 3% to 5%, with yields in prime districts commonly lower due to higher property prices. Yields above 4% are generally considered favourable. Net yields tend to be 1.5% to 2% lower than gross yields due to expenses.

EdgeProp Singapore provides calculators to help you determine both gross and net rental yield for any property, allowing you to make informed investment decisions.