Rental yield helps compare income with the capital committed, but it should not be confused with total return. Begin with evidence of achievable rent for similar furnished or unfurnished homes in the same micro-market, not the highest listing.

Gross and net yield

Gross annual yield is annual rent divided by the property acquisition cost, multiplied by 100. For a more useful net estimate, subtract expected vacancy, owner-paid maintenance, repairs, brokerage, insurance and other recurring owner costs from annual rent. Divide that net income by the full capital cost, including registration, fit-out and initial furnishing where relevant.

Stress-test the estimate

Model at least one vacant month, a periodic repair allowance and a lower-rent scenario. Check tenant demand drivers, supply of comparable units, society rules, commute and the practical condition of the home. Rent can vary significantly by tower, floor, view, furnishing and maintenance quality.

Yield is only one part of a property decision. Liquidity, financing cost, taxes, legal quality and your holding period matter too. Rental and tax treatment change, so validate current market evidence and consult qualified tax and financial professionals.