Net rental yield, defined properly, including the costs most quotes leave out.

15%

vacancy allowance applied

12%

management cost applied

~1/3

typical gross-to-net shrinkage

Almost every yield figure published next to a property is gross. It has to be, because a listing carries two numbers, the rent and the price, and gross yield is the only figure those two can produce. A net yield needs four more inputs the listing does not have. This page defines the term, gives the formula in the exact form used across the rest of this site, and works through what each deduction does to the result. The market figures live elsewhere: Thailand rental yield, Phuket rental yield, and the study underneath both, the net yield gap across Thai condo listings. This page is the definition they all assume.

What is the net rental yield formula?

Stated in one line:

Written as the steps a spreadsheet actually performs, with the constants published across this site:

Those constants are not aggressive. A 15% vacancy allowance is roughly seven weeks empty a year. A 12% management cost is what it takes for somebody other than you to run the letting. Property tax is small in the markets covered here, roughly 0.02% of price a year in Thailand. The line that does the damage is the building’s maintenance charge, and it is the one number a listing never prints. What the maintenance charge funds, and why the sinking fund behind it decides the deal.

What is the difference between gross and net rental yield?

Two differences, and both push the number down.

1. The top of the fraction shrinks. Gross uses the full advertised rent for twelve months. Net removes the months the unit is empty, the cost of letting and managing it, the building’s charges and the tax.
2. The bottom of the fraction grows. Gross uses the asking price. Net uses everything paid to take ownership: price, transfer fee, legal fees, any agency cost, and the furnishing a unit needs before a tenant will pay the assumed rent.

Apply both corrections and the gap is large and predictable. Across the Thai condo listings measured for the net yield gap study, the median advertised gross figure loses roughly a third of itself once vacancy, management and the maintenance fee are applied. The shrinkage showed up in every sub-district measured. That is not a market quirk. It is what the gross convention does everywhere it is used.

How do you calculate rental yield, step by step?

Six steps. Do them in this order and the arithmetic cannot go wrong. The only difficulty is sourcing honest inputs.

1. Fix the rent. Not the best asking rent on one portal. The consensus across every platform advertising comparable units in that building, and then a haircut, because achieved rent sits below asking rent.
2. Annualise it. Monthly rent multiplied by twelve. This is the gross annual figure, and it is the last uncorrected number in the calculation.
3. Apply vacancy. Reduce the annual figure for the weeks between tenants. 15% is the working assumption here; a short-let unit in a seasonal market needs a harsher one.
4. Apply letting and management costs. Whatever it costs for the unit to be advertised, shown, contracted and maintained between tenancies, whether you pay somebody or absorb the time yourself.
5. Subtract the fixed annual charges. The building’s maintenance charge and the property tax. These are owed whether the unit is let or empty, which is precisely why they belong here and not in a footnote.
6. Divide by the total purchase cost. Every unit of currency it took to own the unit, not the number on the listing.

If you want the arithmetic done for you, the free rental yield calculator runs this exact stack, with country versions for Thailand, Bali, Vietnam and the Philippines. The calculator is not the hard part. The inputs are.

Why does the total purchase cost, not the asking price, go on the bottom?

Because the asking price is not what the unit costs you. Between the offer and the keys sit a transfer fee, legal fees, any agency fee, and, on a unit you intend to let, the furniture and fit-out without which the rent assumption is fiction. That is all capital committed, and none of it comes back unless the unit resells for more.

Using the asking price flatters the yield twice: once by understating the denominator, and once by pretending the fit-out that generates the rent was free. Put the whole acquisition on the bottom line. The number gets smaller and it gets true. The itemised Bangkok closing-cost stack shows what actually sits between the asking price and the total.

If a platform says the property has a 6% or 8% rental yield, how much of that actually reaches me after maintenance, platform fees and vacancy?

Roughly two thirds of it, and that is before the denominator is corrected. Work it through with the constants above, expressed purely as percentages so the arithmetic is checkable on its own terms.

Start at a quoted 6% gross. Take 15% off for vacancy and 6.00 becomes 5.10. Take 12% of what is left for management and 5.10 becomes 4.49. Subtract a building maintenance charge worth 0.60% of the purchase total each year, and property tax at 0.02%, and the figure lands at 3.87%. About 35% of the advertised number has gone, and nothing unusual happened to get there.

Start at a quoted 8% instead and the same stack gives 6.80, then 5.98, then 5.36%. A third again. The proportion is stable because most of the shrinkage is multiplicative: vacancy and management scale with the rent, so they take the same share out of a big number as a small one.

Two warnings on that arithmetic. The maintenance charge is a fixed sum, not a percentage, so on a cheap unit it eats a far larger share of the yield than on an expensive one in the same building. And the 6% or 8% you were quoted was itself built on an asking rent, not an achieved one. Correct that too and the gap widens again.

What does a vacancy assumption do to the result?

It sets a ceiling on everything downstream. A vacancy allowance is the share of the year you assume the unit produces nothing, and it is applied before every other deduction, so it scales all of them.

At 0% vacancy, which is what an advertised yield silently assumes, a quoted 6% stays 6%. At 10% it falls to 5.40 before any other cost. At 15% it falls to 5.10. At 25%, which is not unreasonable for a seasonal short-let market, it falls to 4.50. A quarter of the headline figure disappears into an assumption most buyers never write down.

The honest move is to state your vacancy assumption out loud, defend it with something, and then use the same one on every unit you compare. A yield calculated at 5% vacancy and a yield calculated at 20% are not comparable numbers, however precisely each is stated.

How much does a management fee move a net figure?

Directly and proportionally. A 12% management cost removes 12% of the post-vacancy rent, which on a quoted 6% gross is about 0.61 percentage points, and on a quoted 8% about 0.82.

The trap is assuming it is zero because you intend to manage the unit yourself, from another continent, in a language you do not read, while holding a job. If you genuinely will, model it at zero and accept that the yield is now paying you for labour as well as capital. If you will not, model the fee. Most buyers who plan to self-manage a unit abroad hire somebody in year two, and a figure that only works at 0% management was never the figure.

Short-let management is a different line item and costs considerably more than long-let management, which is one of several reasons the Phuket short-let picture reads differently from a long-let Bangkok or Chiang Mai one.

Do you need a net rental yield calculator, or is the arithmetic enough?

The arithmetic is four multiplications and two subtractions. A calculator removes slips, and it is worth using for that alone, but it does not solve the actual problem, which is that two of the six inputs are hard to source and easy to fake.

• The maintenance charge is held by the building’s juristic office, not by the listing. It is set per square metre per month, it changes, and the sinking-fund position behind it matters as much as the charge itself.
• The rent has no public register of achieved figures in any of these markets. What exists is what the platforms ask. Reconciling asking rents across sources for the same building is the closest honest substitute, and it still sits above what tenants pay.

Any calculator fed a portal’s best asking rent and a guessed maintenance charge returns a precise, confident, wrong number. That is the failure mode, not the arithmetic. Run the calculator, then go and verify the two inputs that decide its answer.

What is a realistic net range, and why is a single number misleading?

A single number is misleading because a net yield is one year of income measured against one cost base, on one unit, under one set of assumptions. Change the vacancy assumption and it moves. Change the building and the maintenance charge moves it again. Two units in the same tower can sit a full percentage point apart on the strength of floor level and fit-out alone.

What is worth looking at is the spread, not the hero figure. In the Thai listing study the middle half of Bangkok listings clustered inside roughly a one-point band on net, and the whole distribution moved down together once the fee stack was applied. No sub-district escaped it. That is a more useful fact about a market than any one building’s number, and it is why the market pages here publish medians and quartiles instead of a headline. Market by market: Thailand, Bali, Vietnam, the Philippines.

What should you ask for before accepting any quoted yield?

Five questions. If the person quoting the figure cannot answer all five, the figure is a gross number wearing a net label.

1. Is this gross or net, and net of exactly what? Get the deduction list, not the word.
2. What vacancy rate is assumed? If the answer is none, the figure is gross whatever it is called.
3. What is the building’s current maintenance charge per square metre, and when was it last raised?
4. Where did the rent figure come from? One listing, an average of asking rents, or a signed tenancy. The three are not equivalent.
5. Does the denominator include transfer fees, legal costs and furnishing? If it is the asking price, the yield is overstated by whatever those came to.

Where the definition changes a decision

A definition is only worth having if it changes something. Two places it does.

The first is comparison. Once every unit on a shortlist is stated net, on the same vacancy and management assumptions, with each building’s own maintenance charge, the ranking usually changes. The unit with the highest advertised figure is often not the one that survives, because the advertised figure was doing its work through a low price in a building whose charges were the reason the price was low.

The second is the exit. A net yield describes the holding period. It says nothing about who buys the unit from you afterwards, which is the question a yield-driven purchase most often gets wrong, and it says nothing about whether your name can go on the title in the first place. The foreign freehold question comes first; the five-step framework puts the yield calculation third, after title and after the buyer pool.