Rental yield is more than rent divided by price
Gross yield is useful, but it can hide repairs, vacancies, unpaid bills, agent fees, levies, compliance costs, and weak tenant demand. Investors should calculate both best-case and realistic-case returns before buying.
Basic yield formula
| Measure | Formula |
|---|---|
| Gross annual rent | Monthly rent x 12 |
| Gross yield | Gross annual rent / purchase price x 100 |
| Net annual rent | Gross annual rent minus vacancy, repairs, levies, agent fees, rates, insurance, and management costs |
| Net yield | Net annual rent / total acquisition cost x 100 |
Demand questions before investing
- Who is the likely tenant: family, student, professional, company, tourist, or small business?
- How many similar rentals are available nearby?
- What services matter most in that area: water, solar, security, transport, parking, internet, or schools?
- How long do similar properties stay vacant?
- What upgrades would increase rent without overspending?
Capital growth and cash flow are different
A property can appreciate over time but produce weak monthly cash flow. Know which outcome you are buying for.
Author
HouseLink Editorial Team
Property resources team
Practical property guidance from the HouseLink Zimbabwe team.
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