Net rental yield (čistý výnos)
Annual rent minus the costs borne by the owner (repair fund and management, insurance, annual property tax, repairs, loss from vacancy, possibly a property manager), divided by the total acquisition price including purchase costs. It is usually calculated before financing and before income tax. It shows how much the property really earns on the capital invested without a mortgage.
Example
A flat for CZK 4,500,000 (CZK 4,600,000 including purchase costs) brings CZK 216,000 in rent a year. The owner pays CZK 24,000 into the repair fund and for management, CZK 4,000 for insurance and tax, CZK 8,000 for repairs, and one month without a tenant costs CZK 18,000. Net yield: 162,000 / 4,600,000 = 3.5 %, i.e. below the mortgage rate of 5.00 %.
In practice
Count every cost the tenant does not pay. The repair fund is income of the SVJ (owners' association), not a service you can pass on, and older buildings may need extraordinary contributions for major repairs. For an investment mortgage the bank works from the lease agreement, not from your yield calculation. Vacancy and furnishings that need replacing after a few years are the items most often left out.
How it differs
Gross yield deducts no costs at all, so it always looks better. Cash flow goes a step further and also deducts mortgage payments, showing how much money is actually left over or missing each month. For a financed investment it is often negative even when the net yield is positive.
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