Mastering your returns: A guide to maximizing rental yield

The appeal of passive income from real estate draws many to the Philippine property market. However, simply owning a property doesn’t guarantee healthy returns.

- HENRY L. YAP, EUAP, FPIEP, EAROPH

Rental Yield, a straightforward metric, compares a property's annual rent to its acquisition cost. While Gross Rental Yield (GNY) is useful for quick comparisons, it doesn't account for expenses. Therefore, investors rely on Net Rental Yield (NRY), which considers all annual operating costs, including taxes, maintenance, and insurance for an accurate return on investment. A high GNY indicates a positive sign, but NRY reveals the true cash flow.

In 2024, with Metro Manila's average GNY ranging between five to six percent, enhancing every aspect of your net rental operation becomes crucial. Rental yield is primarily influenced by two key factors: rental income and property expenses. To maximize your yield, you have three options: increase your income, decrease your expenses, or ideally, achieve both simultaneously.