Returns
Rental yield vs IRR: reading the two numbers that matter
6 min read · Published Jul 2026 · Estatein Capital research
Every listing shows a target yield and a projected IRR. They measure different things, and confusing them is the most common mistake new investors make.
Rental yield is the simplest number in property investing. Take the annual rent the tenant pays, divide it by the price of the property, and you have the gross yield. A $1 million property earning $92,000 a year has a gross yield of 9.2 percent.
Net yield is what reaches you after property management, a vacancy reserve and tax. On this platform the calculator shows both, because the gap between gross and net is real money and you should see it before you invest.
Internal rate of return, or IRR, is a broader measure. It combines the rent you receive over the holding period with the profit you make when the property is sold, and it accounts for when each rupee arrives. A 15.5 percent projected IRR on a 9.2 percent yield property implies the manager expects around 6 percent a year in capital appreciation on top of the rent.
The important distinction is timing. Yield lands in your wallet every quarter from the first payout. The appreciation component of IRR is only realised when the property is sold, typically three to six years in, and depends on the market at that time.
When comparing two listings, ask which number is driving the return. A high IRR built mostly on projected appreciation carries more uncertainty than one anchored in a signed, long-term lease.