Gross rental yield (hrubý výnos)

A 1+kk flat (studio with kitchenette) in Prague costing CZK 4,500,000 is let for CZK 18,000 a month, i.e. CZK 216,000 a year. The gross yield is 216,000 / 4,500,000 = 4.8 %. Yet the average rate on new mortgages is 5.00 %. With a CZK 3,150,000 mortgage (LTV 70 %), interest alone in the first year comes to about CZK 156,000, roughly three quarters of the rent, before any costs.

Listings and developers almost always quote gross yield, often with optimistic rent. Check what comparable flats in the area let for (a 1+kk in Prague roughly CZK 16,000–20,000) and work out the net yield in the rental yield calculator. Comparing gross yield with interest on a deposit or a bond, neither of which carries costs, flatters the property.

Take off costs and vacancy and you get the net yield, roughly 3.5 % instead of 4.8 % for the same flat. Cap rate relates net operating income to the current market value rather than the purchase price, and it is used mainly to value property.