Real Estate Yield (Yield Imobiliário)

Real estate yield (yield imobiliário, or gross rental yield) is the indicator that expresses, as an annual percentage, the relationship between the rental income a property generates and its market value or acquisition cost. It is the primary metric investors use to compare real estate assets against each other and against other asset classes.

Gross yield (% per year) = (monthly rent × 12) ÷ property value × 100

For a more precise analysis, investors calculate net yield, which deducts:

• Property tax (IPTU) and condo fees (when paid by the owner)
• Income tax on rent received (progressive table, up to 27.5%)
• Maintenance, vacancy, and property management commission
• Amortized acquisition costs (transfer tax, deed, registration)

Brazil’s high-end market has historically operated with gross yields between 3% and 6% per year. In Florianópolis, properties in tourist areas often show gross yields of 4% to 7% per year. Brazil’s Tenancy Law (Lei do Inquilinato, Law 8,245/1991, arts. 48 to 50) caps short-term seasonal rentals at 90 days.

When comparing yield against other assets, investors should factor in the illiquidity premium: unlike a CD (CDB) or an exchange-traded REIT (FII), physical real estate cannot be sold immediately without a discount.