How to Calculate Rental Yield on Your Kenya Property Investment
Is your rental property actually profitable? Most Kenyan landlords don't know their real yield. Here's how to calculate it and what a good number looks like.
Teknant Team
Property Management
Do You Know Your Real Return?
Most Kenyan property investors can tell you what their property cost and what rent they collect. Very few can tell you their actual yield — the percentage return on their investment.
That number matters because it's the only honest way to compare property against other options: a money market fund, Treasury Bills, or another property in a different location.
Gross Rental Yield
Simple to calculate: (Annual Rent ÷ Property Value) × 100
Example: Property value KES 6,000,000. Monthly rent KES 35,000. Annual rent KES 420,000.
Gross yield = (420,000 ÷ 6,000,000) × 100 = 7%
A gross yield of 6-8% is generally healthy for Nairobi residential property. Yields are higher in satellite towns (Thika, Kitengela, Rongai) where property values are lower relative to achievable rents.
But gross yield is incomplete — it doesn't account for what you actually spend.
Net Rental Yield
This is the number that actually matters: ((Annual Rent - Annual Expenses) ÷ Property Value) × 100
Annual expenses to include: land rates, service charges, property management software, maintenance and repairs (budget 1-2% of property value), insurance, vacancy allowance (1-2 months per year), and agent fees when finding tenants.
Using the same example with KES 154,500 in annual expenses: net annual income = KES 265,500. Net yield = (265,500 ÷ 6,000,000) × 100 = 4.4%. A significant difference from 7% gross.
What's a Good Yield in Kenya?
Westlands and Kilimani: 4-6% gross (high property values suppress yield). Kasarani and Ruiru: 7-10%. Thika and Kitengela: 8-12%. Net yields are typically 2-4 percentage points below gross.
The Yield Killers to Watch
Vacancy — Two months empty per year reduces effective annual income by 17% before a single expense.
Deferred maintenance — Small repairs ignored become big repairs. Budget proactively.
Rent not keeping up — If you haven't increased rent in 3 years and the market has moved 20%, you're leaving money behind. Annual rent reviews, even modest ones, compound significantly.
Poor tenant selection — One tenant who pays consistently late or damages the unit on exit can wipe out a year's profit margin.
Track Your Yield With Teknant
The inputs you need — rent collected, vacancy days, maintenance costs — are exactly what Teknant tracks automatically. Monthly financial reports give you the data to know which properties to hold, which to sell, and where to invest next.
Know your numbers. Your money depends on it.
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