In short
- Gross yield = annual rent / flat price × 100. It is quick, and it is optimistic.
- Net yield = (annual rent − empty months − costs − tax) / total amount invested × 100.
- Net yield is usually well below gross, because tax, repairs and months without a tenant cut into it.
- Compare yields across areas and against what the same money would earn in a deposit, or against your mortgage rate.
Gross yield: the quick number
Gross yield shows what percentage of the flat's price you get back in rent each year. The formula is simple: annual rent / flat price × 100.
If a flat costs 100,000 euros and rents for 550 euros a month, the annual rent is 6,600 euros and the gross yield is 6.6%. The number is easy to compare between flats, but it assumes the tenant pays all 12 months and you have no costs at all.
Net yield: what stays in your pocket
Net yield counts only what is left after every cost, and divides it by everything you invested, which is more than the flat's price.
Net yield = (annual rent − empty months − costs − tax) / (price + buying costs + renovation) × 100.
Continuing the example: buying costs are 3,000 euros and renovation before letting is 7,000 euros, so 110,000 euros are invested. One month a year stays empty, so you receive 6,050 euros. Real estate tax is 100 euros, insurance 80 euros, small repairs 600 euros, and building management plus heating during the empty month 120 euros. Tax at 10% of the income after deducting real estate tax is 595 euros.
That leaves 4,555 euros, and the net yield is about 4.1%. That is 2.5 percentage points below gross. Every number in the example is an assumption to show the method.
| Gross | Net | |
|---|---|---|
| Income | 12 months of rent | Months actually paid |
| Costs | Not deducted | NĪN, insurance, repairs, bills for empty months |
| Tax | Not deducted | Deducted |
| Divided by | Flat price | Price + buying costs + renovation |
| In the example | 6.6% | 4.1% |
Rental yield in Riga by neighbourhood
Yields differ by area, because flat prices and rents do not move at the same pace. In cheaper areas the gross yield is often higher, but empty periods can be longer and the buildings older, with bigger repairs. In the centre and in new builds the price per m² is higher, so the percentage can be lower even when the rent is higher.
If you buy with a mortgage
Net yield before financing tells you how good the flat itself is. If you buy with a loan, compare it with the loan rate. If the net yield is below the mortgage interest rate, the borrowed money costs you more than the flat earns, and any profit depends on the price going up.
To see what the monthly payment would be, read Monthly mortgage payment. Banks often ask for a bigger down payment on a second home.
Before you calculate your yield
- Use a realistic rent from similar flats nearby, not the rent you would like to get
- Allow for at least one empty month a year
- Ask the building manager about the repair fund contribution and planned works
- Check the real estate tax amount for this property
- Choose your tax regime and include the tax in the calculation
Common questions
What is a good rental yield in Riga?
Your own comparison decides: net yield should beat deposit interest, and your mortgage rate if you borrow.
How do I calculate the rental yield on a flat?
Gross: annual rent / price × 100. Net: take empty months, costs and tax off the annual rent, then divide by the price plus buying costs and renovation.
Do utilities count in the yield?
If the tenant pays them, no. When the flat stands empty you pay building management and heating, and those are costs.
Why is net yield so much lower?
Tax, repairs, insurance and months without a tenant reduce the income, and buying and renovation costs are added to what you divide by.
Sources
- Metodiskais materiāls: Nodokļi no dzīvokļa izīrēšanas vai iznomāšanas ienākumiem (updated 21.07.2026) · Valsts ieņēmumu dienests
- Pirmie soļi nekustamā īpašuma izīrētājam · Valsts ieņēmumu dienests
This article is for information only and is not legal, financial or tax advice. It may contain mistakes or be out of date, so check it against official sources or with a specialist before you decide. m²cena accepts no liability for any loss or damage arising from the use of the information in this article.