Property Investment Basics: Rental Yield, Rent vs Growth
Updated 26 October 2026
Property can be a sound long-term investment, but returns are slower and less certain than advertisements suggest. These answers show how to judge one fairly.
How do I calculate rental yield?
Gross yield = yearly rent ÷ purchase price × 100. For example, a ₹58 lakh 2 BHK let at ₹15,000 a month earns ₹1.8 lakh a year, a gross yield of 3.1%. Net yield subtracts maintenance, property tax, vacant months and repairs, and divides by the full cost including stamp duty.
Is buying a flat a good investment?
It can be if you hold for the long term, buy at a fair price in an area with real demand, and can pay the EMI without relying on rent. Residential rental yields are usually low, so most of the return has to come from price growth, which isn’t guaranteed.
Should I buy for rent or for price growth?
For steady rent, buy a smaller home (1–2 BHK) near jobs, colleges or transport. For growth, buy early in an area where infrastructure such as a metro line is actually being built, and plan to hold for seven years or more.
Residential or commercial property: which earns more?
Shops and offices usually earn a higher rent relative to price, with longer leases, but stay empty longer between tenants and need more money. Homes are easier to rent, finance and sell.
Is a high rental yield always better?
No. A high yield can come from a low price in a weak location, an old building or an optimistic rent. Check real rents nearby, vacancy, condition and how easily the property would sell.
Is an under-construction flat a good investment?
It can mean a lower entry price, but the money earns nothing until possession and any delay adds cost. Count pre-EMI interest, GST and the RERA completion date into the return.
How do I compare property with other investments?
Compare after costs and over the same number of years, and weigh liquidity (property takes months to sell), how much you would borrow and how much of your savings it ties up.
What is a REIT?
A Real Estate Investment Trust is a listed fund that owns rent-earning commercial property and pays out most of its income. It lets you invest small amounts and sell easily without owning a property yourself.
This guide is general information, not legal or financial advice. Rules and charges change; confirm them with the official source or a professional before you commit.