How to Calculate Rental Yield Before Buying an Apartment to Rent Out
Thinking of buying an apartment to rent out, whether in New Damietta for students and workers or in Ras El Bar for summer visitors? The question is not "how much will I earn?" but "how much will I actually keep after costs?" That is what net rental yield measures. Property investment never guarantees a profit, and every unit is different, so run the numbers yourself.
Gross yield is only a starting point
Gross yield = (monthly rent × 12) ÷ total purchase cost × 100
It is easy to quote, but it assumes the unit is rented all year with zero costs, which rarely happens.
Net yield is the number that matters
Net yield = (actual annual rent − annual costs) ÷ full acquisition cost × 100
Full acquisition cost includes the price, contract and registration costs, legal fees, any broker commission, finishing or renovation, and furniture if you rent furnished.
Annual costs include vacancy between tenants, maintenance, building or owners' association fees, management fees if someone handles rentals for you (common for Egyptians abroad), and utilities if they are included in the rent.
A hypothetical example
These figures are illustrative, not market prices. Full cost: EGP 1,500,000. Rent: EGP 8,000 a month.
| Item | Per year |
|---|---|
| Rent, 12 months | EGP 96,000 |
| One month vacant | − EGP 8,000 |
| Maintenance | − EGP 6,000 |
| Fees and other costs | − EGP 4,000 |
Gross yield is 6.4%; net yield is 5.2%. Compare the net figure with other options, and remember property values can rise or fall.
Summer rentals in Ras El Bar work differently
- Base income on the weeks or nights you expect to rent, not 12 months.
- Add cleaning between guests and faster wear on furniture and appliances.
- Budget for management if you do not live nearby.
- Consider a hybrid: summer lets plus a longer lease off-season if demand exists.
Lease basics
Under Law No. 4 of 1996, units never rented before, or whose previous lease ended with no one entitled to stay, are governed by the Civil Code, furnished or unfurnished. In practice the written agreement sets the term, rent and increases. Spell out the duration, rent, any increase, the deposit, and who pays utilities and repairs, and have a lawyer review the contract.
Checklist
- Ask about actual rents for similar units nearby, not asking prices.
- Define your target tenant: families, students, workers or holidaymakers.
- Calculate the full acquisition cost.
- Estimate vacancy realistically.
- Add maintenance, fees and management.
- Calculate net yield and compare alternatives.
- Use a clear written lease.
FAQ
What is the difference between gross and net yield?
Gross divides annual rent by price; net subtracts costs and vacancy and divides by the full cost, so it is more realistic.
Is furnished renting always more profitable?
Rent may be higher, but so are furniture, wear, management and vacancy costs. Calculate both.
Does price appreciation count in rental yield?
No. Yield measures rental income only. Appreciation is separate and not guaranteed.
Sources
On Masari you can compare unit prices, floor plans and payment plans before contacting any seller.