Value
Gross initial yield
Gross rent divided by the investment.
The gross initial yield is the annual rent divided by the total investment (purchase price plus costs). A low gross initial yield generally indicates a sought-after, low-risk property; a high gross initial yield indicates greater risk or a lower-quality location.
See also
Commercial property valuationFrequently asked questions about Gross initial yield
What does Gross initial yield mean?
Gross rent divided by the investment.
How does Gross initial yield work in commercial real estate?
The gross initial yield is the annual rent divided by the total investment (purchase price plus costs). A low gross initial yield generally indicates a sought-after, low-risk property; a high gross initial yield indicates greater risk or a lower-quality location.
Related terms in value
Net initial yield
Yield after deducting the owner's expenses.
Commercial property valuation
Formal valuation by a valuer.
Rental capitalisation method
Valuation method based on rental income.
DCF method (discounted cash flow)
Valuation based on future cash flows.
Letting potential
The extent to which a property can be let quickly and at a market rent.
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