Net Yield

Gross yield is the annual rent divided by the property's price, with nothing taken off. A $300,000 flat renting for $1,500 a month has a gross yield of $18,000 divided by $300,000, or 6%. Net yield subtracts the costs of owning and running it: management, maintenance, insurance, taxes, service charges and an allowance for empty months. If those come to $5,000 a year, the net yield is $13,000 divided by $300,000, or 4.3%. The gap between the two is typically 25 to 40% of the rent for residential property, and it is the number that decides whether the investment actually pays.

Fractional platforms in different markets grew up with different habits. Some quote gross yield in the headline because it is the local convention. Some quote net yield after property costs but before their own fees. Some quote the fully net figure that reaches investors. The same word on two listings can therefore describe two different calculations. Before comparing a 7% on one platform with a 5% on another, check what each one has deducted. A listing's fee section usually says, and the offering document always does. Threeworld shows each platform's own figure and labels it as the platform reports it. It does not restate one platform's gross number as another's net, because the underlying data would not support that. The comparison is yours to make with the deductions in view.

Start from the gross yield and subtract, as percentages of rent: management (8 to 12% for residential), maintenance (5 to 10%, more for older buildings), vacancy (5 to 8%), insurance and taxes (varies a lot by country and state), then any platform or asset management fee. A 7% gross yield with 35% of rent going to costs and fees is a 4.55% net yield. That is the figure to hold up against a savings rate, a REIT dividend or a bond, because it is the one you could actually spend.