Gross Yield

Gross yield is a rental property's annual rent divided by its purchase price, expressed as a percentage.

Gross yield measures how much rent a property produces relative to its price: annual rent divided by purchase price, expressed as a percentage. For example, a property bought for $120,000 that rents for $1,200 a month collects $14,400 a year, which works out to a 12% gross yield.

Gross yield is the fast screening metric for rental buyers — especially buy-and-hold and Section 8 investors comparing many deals at once. It answers one question quickly: does the rent justify the price? But it is gross, not net — it ignores taxes, insurance, vacancy, maintenance, management, and capital expenses, which is why two properties with identical gross yields can perform completely differently once they are owned.

Beginners get this wrong in two directions. They confuse gross yield with net yield or cap rate and assume the whole percentage lands in their pocket — it does not, because every operating expense still has to come out. And they chase the highest gross yield on the sheet without asking why it is high: heavy deferred maintenance, a tough block, or rents that exist on paper but not in practice. Use gross yield to sort a list of deals fast, then underwrite the survivors with real expense numbers before you buy — or before you promise a buyer the deal performs.