Rental yields in Karachi: what landlords actually earn

Gross versus net

Gross yield is annual rent divided by purchase price. It is easy to calculate and it is not what you earn.

Net yield is what is left after the costs of actually being a landlord. On the portfolios we manage, the gap between the two is consistently wider than owners expect when they buy.

What comes out

• Vacancy — budget for it even in a strong area. A unit that re-lets in three weeks has lost most of a month.
• Maintenance — older buildings cost more, and the costs are lumpy rather than monthly.
• Management — whether you pay an agent or spend the Sunday afternoon yourself.
• Society and maintenance dues — often not recoverable from the tenant.
• Tax on the rental income.

Where the numbers hold up

Apartments in established buildings with a working lift and a reliable backup supply let faster and stay let longer than the headline yield suggests. A slightly lower gross on a building that works beats a higher gross on one that does not, because the vacancy line is what actually moves net yield.

The question to ask

Not "what does this yield?" but "what did the last tenant pay, and how long did it take to find them?" The second half of that question is the one that predicts your income.