Rent is the only opinion of a property backed by someone actually paying it every month. Price is that plus a bet on appreciation. Comparing the two gives you a fast, unsentimental read on whether an asking price is anchored to anything — and this runs it both ways, showing the rent the price implies and the price the rent implies.
Sets the benchmark yield. Commercial earns more because leases are longer and the tenant carries more of the cost.
What it rents for now, or what a comparable unit nearby rents for.
This calculator needs JavaScript. On paper: multiply the monthly rent by 12, divide by the price, multiply by 100. That is the gross yield. Compare it to about 3% for residential, 6–8% for commercial.
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This is a gross yield — rent before property tax, maintenance, brokerage, repairs and vacancy. Net yield typically runs 1 to 1.5 percentage points lower, so a property that looks borderline here is usually worse in practice. Anything within 5% of the benchmark is treated as fairly priced, because neither input is precise enough to justify a tighter call. The benchmarks are market conventions, not laws: yields vary by city and micro-market, and a genuinely better location can defend a lower yield.
An asking price is a claim about the future. Rent is a claim about the present, and somebody is settling it in cash every month. That makes rent the closest thing a property market has to a verified valuation: a tenant who thinks a flat is not worth ₹25,000 a month simply rents a different one, and the landlord finds out within a quarter.
Price carries all of that plus an expectation of appreciation, the tax treatment of a home loan, and whatever the last comparable sale anchored people to. Dividing one by the other separates the part of the price that income supports from the part resting on the bet. Neither part is illegitimate. But a buyer should know the split before signing, and most never calculate it.
Residential yields in India are structurally low — roughly 2–3% gross, among the lowest of any major economy. That figure is consistent across sources, which is why 3% is the residential benchmark here rather than something that would look healthier: it reflects what Indian residential property actually earns, not what an investor elsewhere would demand.
Commercial earns considerably more, but published estimates disagree far more than they do on residential — industry surveys put retail anywhere from 5% to 12% and offices from 6% to 10%, depending on grade, city and who is doing the counting. The benchmarks here (6% retail, 7% office, 8% warehouse) sit at or below the bottom of those ranges deliberately. They are screening floors, not market averages: a property that fails to clear a deliberately low bar has a pricing problem that no choice of source rescues.
The residential-to-commercial gap itself is not a market inefficiency. Commercial leases run longer with contractual escalations, the tenant usually carries more of the operating cost, and the buyer takes on real vacancy and liquidity risk that a flat in a functioning city does not carry to the same degree. The higher yield is compensation for that risk, not free money.
Everything above is gross yield, and the gap to net is wider than most buyers expect. Property tax, society maintenance, repairs, brokerage on each re-let, and the months between tenants all come out of it — typically 1 to 1.5 percentage points. A flat showing 3% gross is realistically delivering closer to 2% once the year is fully accounted for, which is worth holding beside a fixed deposit before concluding anything.
This is also why the calculation is worth running before, not after, an offer. A property failing the check at gross yield fails it more decisively at net, and the difference between those two figures is the part nobody puts in the listing.
This is a single-moment check on one variable. It says nothing about whether a location is about to get a metro line, whether the builder delivers, or whether the loan makes sense given everything else you owe. A property can fail this test and still be the right purchase — that is precisely what a bet on appreciation is.
What it does is stop the bet being invisible. If you want the fuller decision with interest, stamp duty and the down payment’s opportunity cost included, the rent versus buy calculator runs twenty years of both paths, and the worked version of this check goes through the arithmetic on a ₹50 lakh flat step by step.
For residential property, roughly 3% gross, and sources agree closely on that. Commercial is higher but much less settled — estimates for retail run from 5% to 12% and offices from 6% to 10% depending on grade and city. This calculator uses 6%, 7% and 8% as deliberately conservative floors. All of these are gross; subtract 1 to 1.5 points for tax, maintenance and vacancy.
Multiply the monthly rent by twelve, divide by the asking price, and multiply by 100. That gives the gross yield. Compare it to about 3% for a residential flat: meaningfully below suggests the price is running ahead of the income, meaningfully above suggests the opposite. The gap between the two is the share of the price resting on expected appreciation.
Because the risk is higher and so is the cost of holding it. Commercial leases are longer with built-in escalations, but vacancies last longer, tenants are harder to replace, and the asset is far less liquid if you need to exit. A retail unit at 6% and a flat at 3% can be priced equally sensibly — the extra yield is payment for the extra risk, not a better deal.
Use gross to screen quickly, then net before committing. Gross needs only two numbers you already have and is enough to reject an obviously stretched price. Net subtracts property tax, maintenance, brokerage, repairs and vacancy, and typically lands 1 to 1.5 points lower — which is the figure worth comparing against a fixed deposit or a debt fund.
Use a comparable rather than an estimate from the seller. Look up two or three units of similar size and age in the same building or immediate locality on a listing site, and take the middle figure. Asking rents run slightly above settled rents, so trimming 5–10% off a listed figure gets closer to what the property would actually earn.
TLDR Money keeps property beside your funds, stocks, gold and EPF, net of the loan against it — so what the flat contributes to your net worth is a figure you can look at rather than an assumption. Subscription only, no commission on anything you hold.
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Calculator and assumptions last reviewed 5 August 2026.
This is an explanation of arithmetic, not advice about your money. TLDR Money is not a registered investment adviser and earns nothing from any product mentioned here. Figures are illustrative; your own numbers, taxes and circumstances will differ.