Yield is not a single number. Two platforms can both quote '13%' and mean very different things. Spend five minutes here and never be misled again.
Gross rental yield
Annual rent ÷ asset price. It ignores operating costs, vacancies, taxes, and platform fees. Useful only as a top-line sanity check; never make a decision on gross yield alone.
Net rental yield
Annual rent minus operating costs (property management, utilities, maintenance, vacancy provision) ÷ asset price. This is closer to what the asset actually produces before financing or platform fees.
Distribution yield
What actually lands in your bank account ÷ your invested amount. After platform management fees, SPV overhead, taxes withheld, and any reserves. This is the number that matters for cash-flow.
IRR (Internal Rate of Return)
The annualised return that equates all cash in (your subscription) with all cash out (quarterly distributions plus exit proceeds). IRR captures both yield and capital appreciation; it is also very sensitive to assumed exit value and timing.
Cap rate
A property-level metric: NOI (net operating income) ÷ asset value. It measures how the asset is priced vs. what it earns, independent of financing. Lower cap rate = richer pricing (investors willing to pay more per rupee of income).
How platforms blur the lines
- Advertising gross yield on day one and distribution yield in the fine print.
- Quoting IRR that assumes an aggressive exit cap rate (e.g. 6.5%) on an asset bought at 8%.
- Projecting 5% annual rent escalations when the lease contractually provides 3%.
- Ignoring vacancy assumptions — even 90 days of vacancy kills the year's distribution yield.
Questions to ask
- What is the Year-1 distribution yield, after all fees?
- What cap rate is the exit value calculated at, and why?
- What rent escalation is assumed, and is it contractual?
- What is the vacancy assumption for the holding period?
- Show me the cash-flow waterfall.