Real Estate ROI Calculator: Rental Yield & Capital Gain

What Is Real Estate ROI?

Real estate Return on Investment (ROI) evaluates the total financial profit generated by a real estate property, combining net rental cashflow income and capital appreciation relative to the purchase cost basis.

In India, property returns come from two distinct streams: regular monthly rental income and long-term capital price appreciation when the asset is sold.

This calculator isolates both cash flows, subtracts annual society maintenance fees and municipal taxes, and projects net lifetime returns for residential and commercial property investments.

Rental Yield Calculation Formula

Rental yield is the percentage rate of income generated by a real estate property annually relative to its purchase value.

Net Rental Yield Formula

Net Yield % = [(Annual Rent - Annual Maintenance & Taxes) / Purchase Price] × 100

Comparison of residential and commercial property rental yields across Indian tier-1 cities.
Property Type	Gross Rental Yield %	Net Yield % (Post Expenses)	Capital Growth Expectation
Residential Apartments (Mumbai / Delhi)	2.8% - 3.4%	2.1% - 2.6%	6% - 8% p.a.
IT Corridor Flats (Bangalore / Pune)	3.5% - 4.2%	2.8% - 3.4%	8% - 11% p.a.
Commercial Office Spaces (Grade A)	7.5% - 9.0%	6.8% - 8.2%	4% - 6% p.a.
Warehousing & Industrial Parks	8.5% - 10.0%	7.8% - 9.1%	5% - 7% p.a.

How to Use This Real Estate ROI Calculator

Select Calculation Mode: Choose between "Rental + Appreciation ROI" and "Pure Rental Yield".
Enter Property Cost: Set total purchase price and monthly rental income.
Enter Maintenance & Taxes: Input annual society maintenance charges and municipal property tax.
Set Capital Growth Rate: Adjust expected annual property appreciation percentage.

Frequently Asked Questions

What is real estate ROI in India?

Real estate ROI (Return on Investment) measures total gains from a property investment, combining net rental cashflow income and property capital value appreciation over time.

How to calculate rental yield in Indian cities?

Gross rental yield is calculated as: Gross Yield % = (Annual Rental Income / Property Purchase Price) × 100.

What is a good rental yield for residential property in India?

Average residential rental yields in major Indian metro cities range from 2.5% to 4.0% per year, whereas commercial property yields range between 7.0% and 9.5%.

What is the difference between gross yield and net rental yield?

Gross rental yield considers only annual rent vs property price. Net rental yield subtracts annual maintenance charges, property taxes, insurance, and vacancy losses from gross rent before dividing by price.

How does capital appreciation affect total real estate ROI?

Capital appreciation represents price growth of the property. In India, capital appreciation typically accounts for 60% to 80% of total long-term real estate returns.

How is rental income taxed under Section 24 of Income Tax Act?

Rental income is taxed under Income from House Property. Owners get a flat 30% standard deduction for maintenance, plus tax deductions on home loan interest under Section 24(b).

Can property management fees be deducted from rental yield?

Yes, in net rental yield calculations, property manager commissions, society maintenance fees, and annual municipal property taxes must be deducted from gross rent.

How does home loan EMI affect real estate cash flow?

If a property is mortgaged, monthly home loan EMI reduces net cash flow. If monthly rent exceeds EMI and maintenance, the property generates positive cash flow.

Why are commercial property yields higher than residential yields in India?

Commercial properties carry longer lease commitments (5 to 9 years), triple-net lease terms, and higher tenant creditworthiness, yielding 7% to 9.5% compared to 3% for residential flats.

How does this real estate ROI calculator work?

This calculator computes gross rental yield %, net rental yield %, total rupee cashflow, capital appreciation, total ROI %, and year-by-year cashflow projections.

What is Fermor?

Fermor is a financial platform for India. Every calculator is free to use, and a free account is available to save your results and access them later. Fermor is building an automated financial action system using the Account Aggregator framework to connect real accounts and close the gap between knowing what to do with your money and actually doing it.

Disclaimer: Figures provided by this calculator are estimates for evaluation purposes. Real estate investments in India carry vacancy risk, property tax variations, maintenance hikes, and illiquidity risks. Rental income taxation under Section 24 of the Income Tax Act should be confirmed with a qualified Chartered Accountant.