Rental yield is a property's annual rent expressed as a percentage of everything it cost you to own it. Gross yield uses the rent you hope to collect; net yield first subtracts the empty months and the repairs. The net...
Rental yield is a property's annual rent expressed as a percentage of everything it cost you to own it. Gross yield uses the rent you hope to collect; net yield first subtracts the empty months and the repairs. The net figure is the only one that belongs in a family's planning.
The full arithmetic lives in Your First Income Asset, and its worked example is worth memorizing. Five double-room units on a 50 by 100 plot: UGX 130 million all-in, UGX 18 million in gross annual rent, which looks like a 13.8 percent yield. Then honesty arrives. Assume each unit sits empty one month a year, set aside 10 percent of collected rent for repairs and repainting, and the net yield lands at 11.4 percent. Still strong, and now true.
The reason the percentage matters is comparison. The corpus records money market unit trusts paying around 12 percent in mid-2025, from one form and a phone, with no tenants and no broken toilets, as Unit Trusts for Family Money details. A rental property must clear that hurdle after voids and repairs, or justify itself on land appreciation or family use, and the corpus rule is to say that sentence out loud before buying. Yield is how a family compares a building it can touch with an instrument it cannot, on equal terms.
Brochure math is the trap. The seller quoting fifteen hundred thousand shillings a month from five units is describing gross rent with no voids, no repairs, and no fees in the purchase cost. Real net yield is routinely two or more percentage points lower, and the difference decides whether the property beats the passive alternative. The second confusion is counting appreciation as yield. A plot that is rising in value but collecting no rent has a rental yield of zero; the corpus is blunt that bare land you are simply holding is a hope, and The Myth That Land Never Loses Value documents what that hope costs when the family needs money on the school's schedule rather than the land's. Appreciation is real, and it is a different number with different risks. Never let the two blur into one feeling of "it pays."
Run the worksheet on two candidates this week: one property you have been eyeing and one licensed money market unit trust. Total all-in cost, gross rent, one void month per unit, 10 percent repair reserve, then divide. Write the two net figures side by side and store the page with your family records; LegacyPot's analytics module is built to keep exactly this comparison honest over time. Ninety minutes of arithmetic is the difference between buying an asset and buying a story.