Rental Yield Calculator

Rental Yield & Profitability Calculator

Calculate the Gross and Net rental yield to understand the true return on your property investment.

Purchase & Investment

Income & Annual Expenses

Note: A 7.5% rental income tax on gross rent is automatically included in the calculation as per current KRA rates.

Beyond Rent: How I Calculate the True Profitability of My Rental Property

As someone who has spent years working in corporate governance and operations management, I’ve learned to look at investments with a critical eye. In Kenya, property investment is often seen as a golden ticket to financial freedom. The idea of earning passive rental income is certainly attractive, but over the years I’ve come to realize that not every rental property guarantees success. To truly understand how well your investment is performing, you have to dig deeper than just the monthly rent. That’s where calculating the rental yield becomes so important.

Rental yield is simply the annual return from your property expressed as a percentage of its total value. It’s the tool I use to compare different opportunities and make informed decisions. Let me walk you through how I look at it, and why the distinction between ‘Gross’ and ‘Net’ yield is absolutely critical.


Gross Yield vs. Net Yield: The Only Number That Truly Matters to Me

Early on, I made the same mistake many landlords do—I only looked at gross yield. It looked impressive on paper, but it didn’t tell me the whole story. Now I always focus on net yield, because it shows the actual money my property is putting into my pocket after covering all costs.

  • Gross Yield is what you see before taking out any expenses. It’s a basic snapshot.
  • Net Yield is what’s left after paying for everything. This is my real return.

Table 1: Key Real Estate Investment Terms As I Use Them

Term What It Means Why I Care
Gross Rental Yield Total annual rent divided by property value. `(Annual Rent / Property Value) * 100`. Helps me quickly compare deals, but I never rely on it alone.
Operating Expenses All the costs of keeping and renting out the property (not including the mortgage). These eat into income fast; understanding them is key to knowing my true returns.
Net Rental Yield Annual rent minus expenses, divided by the property’s value. This is the real return. This is what matters most to me. It shows how hard my asset is really working.
Capital Appreciation How much the property’s value increases over time. Important for long-term wealth, but separate from rental income performance.

What Being a Landlord in Kenya Actually Costs Me

When I calculate net yield, I try to be brutally honest about all my costs. It’s not just about the mortgage. Many investors ignore hidden expenses, only to be disappointed later. Let me show you a quick example from a hypothetical apartment I analyzed, worth KES 8 million, rented out at KES 40,000 a month.

Table 2: Example of a Net Rental Yield Calculation

Breaking Down the Yield on a KES 8M Apartment
A. Annual Gross Rent (`KES 40,000 * 12`) KES 480,000
B. Subtract: Annual Operating Costs
Service Charge (`KES 5,000 * 12`) (KES 60,000)
Land Rates (Annual) (KES 8,000)
Agent Management Fee (8%) (KES 38,400)
Repairs & Maintenance (5%) (KES 24,000)
Vacancy Provision (1 month rent) (KES 40,000)
Rental Income Tax (7.5%) (KES 36,000)
C. Total Costs (KES 206,400)
D. Net Annual Income (A – C) KES 273,600
Final Net Yield
(273,600 / 8,000,000) * 100 3.42%

So even though the gross income looked like 6%, after costs it’s a much slimmer 3.42%. This honest figure helps me plan better and avoid surprises.


How I Try to Boost My Property’s Yield

Once I have my net yield, I look for smart ways to improve it. This usually means boosting income or cutting costs—without major spending.

Table 3: My Go-To Strategies to Improve Net Yield

Strategy How I Do It Why It Helps
Reduce Tenant Turnover I respond quickly to issues, offer fair terms, and carefully screen tenants for stability. Fewer vacancies and less money spent on finding new tenants.
Affordable, Impactful Upgrades Simple things like new light fixtures or a fresh coat of paint. Attracts better tenants and can justify a slightly higher rent.
Review Costs Every Year I compare insurance and negotiate with fundis to keep maintenance affordable. Directly lifts my net income and yield.
Consider Managing It Myself When I have time, I handle management to save the agent fee. This significantly increases my net yield, though it takes effort.

For me, property is a long game. By staying focused on the real numbers—especially the net yield—I’m not just a landlord, I’m an informed investor who knows exactly how my assets are performing.

Submit application
Your name*
E-mail address*
Your phone*
Login
E-mail
Password
Forgot password?
E-mail