Rental Apartment Yield: How to Calculate It and 8 Ways to Increase It

Annual rent divided by the apartment's purchase price. This is the figure everyone quotes, but it ignores all expenses.

Actual annual income after expenses, divided by the total investment. Expenses include maintenance and repairs, insurance, management fees, tax and lost income during vacant months. Your total investment should also include purchase tax, legal fees and initial renovations.

Illustrative example:

• *Apartment price: Annual amount*: 1,800,000 ₪


• *Rent: 5,500 ₪ × 12: Annual amount*: 66,000 ₪


• *Gross yield: Annual amount*: approximately 3.7%


• *Less: one vacant month: Annual amount*: 5,500 ₪


• *Less: maintenance, insurance and miscellaneous expenses: Annual amount*: 6,000 ₪


• *Income before tax: Annual amount*: 54,500 ₪


• *Net yield before tax: Annual amount*: approximately 3%

This calculation shows where money is lost: every vacant month and every avoidable repair directly reduces your yield. It also points to ways to increase it.

Below-market rent costs you money every month; rent that is too high leaves the apartment vacant. Checking the market before every new tenancy and lease renewal is the simplest, most cost-effective step you can take.

One vacant month a year reduces annual income by approximately 8%. Start marketing before the current tenant leaves, arrange viewings during the notice period and prepare the apartment in advance.

A mechanism linking rent to the Consumer Price Index, or an agreed adjustment at each renewal, prevents your income from eroding over the years. The indexation calculator on our website can help you check what your rent should be today.

Every tenant change comes at a cost: a vacant month, cleaning, painting and marketing. A good tenant who stays another year is sometimes worth more than a small rent increase. Prompt repairs and fair treatment are an investment.

An annual water heater inspection, waterproofing before winter and fixing a small leak promptly cost far less than repairing major damage. Preventive maintenance reduces expenses and protects the property's value.

Painting, lighting, new faucets, air conditioning or cabinets can justify higher rent and help you find tenants faster. Before making any upgrade, calculate how long it will take to pay for itself.

Choosing between the rental income tax exemption, the 10% tax track and taxation at marginal rates can change your net income by thousands of shekels a year. It is worth reviewing your choice annually with an accountant.

Management fees are an expense, but good management addresses most of the areas above: pricing, time to let, tenant screening, rent collection and preventive maintenance. In many cases, it pays for itself.

Ongoing rental yield is only part of the picture. With investment property, a significant share of the profit comes from capital appreciation over time. Mortgage financing, meanwhile, changes the calculation entirely: it increases the return on your equity when things go well and increases risk when they do not. When comparing properties, it is therefore important to consider rental yield, appreciation potential and the financing structure. The investment simulator on our website lets you assess these factors together.

• Keeping rent unchanged for years without checking market rates.


• Choosing the first tenant who applies to avoid a vacancy, only to pay for it later.


• Putting off repairs until they lead to damage.


• Failing to track expenses, leaving you unaware of your actual yield.

Yield is not a figure you calculate once at purchase. To manage it, you need to track it every year: how much income you actually received, how much you spent and on what, how many months the apartment stood vacant and how your rent compared with the market. Keeping organized records of every payment and expense in a spreadsheet or management system helps you spot trends early and make better decisions: when to raise rent, when to renovate and when it may be time to sell.

At Flamingo, we measure our performance by what you keep at the end of the year. In most cases, we offset our management fees through well-calibrated rent increases, shorter vacancies and the prevention of costly mistakes. Our owner portal lets you see all payments, income and expenses for each property in one place.

Want to know your property's actual yield? Leave your contact details, and we will put together a clear picture for you.