Updated 30/09/2026

How to calculate the yield of a rental flat: formulas and a worked example

Gross and net yield, cash flow, cash-on-cash and IRR of a buy-to-let flat. Formulas, common mistakes and a full worked example of a 5.5 million CZK flat in Brno bought with a mortgage.

There are five ways to measure the return on a rental flat, and each one answers a different question. Listings and estate agents usually quote the highest of them, the gross yield. To decide whether to buy a flat, though, you need to see all five, above all cash flow and IRR.

Five metrics and their formulas

Example: a one-bedroom flat in Brno

A 55 m² flat with a kitchen-living room and one bedroom (2+kk in Czech listings) for 5.5 million CZK, rent of 21,500 CZK a month (the Brno average according to the Deloitte Rent Index), 20 % own funds, a 30-year mortgage at 5.2 %, price growth of 4 % a year and a sale after 10 years. Purchase costs (lawyer, bank fees) of 100,000 CZK.

1. Gross yield: 4.7 %

21,500 × 12 = 258,000 CZK a year. 258,000 / 5,500,000 = 4.69 %. That looks decent, but we have not paid any costs yet.

2. Net yield: 3.6 %

Deduct the operating costs from the rent: the owners' association (SVJ) contribution for building management and the repair fund (fond oprav), roughly 1,800 CZK a month, plus insurance, property tax, maintenance and vacancy when tenants change. Utility advances (heating, water, lift, cleaning of the building) are paid by the tenant on top of the rent; you pay them only in months when the flat is empty. That comes to roughly 200,000 CZK a year. Divided by the price including purchase costs, the net yield is 3.57 %. That is less than the yield on a Czech government bond, but it does not yet include any growth in the flat's value.

3. Cash flow: you top up 9,500 CZK a month

The mortgage payment on 4.4 million CZK comes to 24,161 CZK. The rent does not even cover the payment, so in the first year you top up roughly 9,500 CZK a month, after tax. Interest and depreciation reduce the tax to zero, so you pay no tax on the rental income in the first years. Over 10 years you top up around 530,000 CZK in total.

4. Cash-on-cash: negative

When cash flow is negative, cash-on-cash is negative too. For mortgaged flats in 2026 this is normal. What matters is whether it pays off when you sell.

5. IRR: 10.5 %

You put 1.2 million CZK into the flat at the start, followed by the monthly top-ups. Over 10 years the tenants pay off roughly 800,000 CZK of principal, and with growth of 4 % a year the flat gains 2.4 million CZK in value. After the sale and repayment of the remaining mortgage, the return on your cash is 10.5 % a year. That beats an ETF, but almost all of the return rests on rising prices. If the flat gains only 2 % a year, the IRR falls to 5.9 %, and if prices stay flat, to practically zero.

What the example shows

• Gross yield overstates the return. The gap between gross and net yield for flats in Czech regional cities is typically 1 to 1.5 percentage points.
• A mortgage raises both IRR and risk. The same flat bought for cash has a positive cash flow of 13,400 CZK a month, but an IRR of only 7.0 %. Leverage works both ways.
• Run a pessimistic scenario too. With slower price growth, a more expensive mortgage after the fixed-rate period and a month without a tenant, the IRR of this flat falls to 3.6 %. That is why the calculator gives it orange, not green.

Most common mistakes

• Using asking rents from listings rather than rents actually achieved. Asking rents tend to be 5-10 % higher.
• Forgetting about vacancy, tenant turnover and the fee for finding a new tenant.
• Plugging in the last ten years (10-16 % a year) as future price growth. The long-term real growth of house prices is around 1 % a year above inflation.
• Leaving out purchase costs and the tax due if you sell within 10 years.
• Comparing the IRR of a mortgaged flat with the gross yield of another flat. Always compare the same metric.

The Výnosometr calculator works out all five metrics at once and adds taxes, the sale and a comparison with an ETF. The quickest way in is to paste the text of a listing with the Paste a listing button.

Sources

• Deloitte Rent Index Q2 2026
• Swiss Life Hypoindex (average mortgage rates)

This text is indicative and does not replace tax, legal or financial advice. For binding decisions consult a Czech tax adviser. · Privacy policy · Terms of use · Consent settings