Rental yield on a pre-leased shop: how to calculate it honestly
Published 24 September 2026
A pre-leased shop is sold with a tenant already in place. Its price is usually justified by a yield figure. Calculate that figure yourself from documents; do not rely on a marketed percentage. This is general information, not investment advice, and no yield or appreciation is guaranteed.
Gross yield = annual rent in the registered lease ÷ total acquisition cost × 100.
Use the rent actually payable today, not a future escalated rent. Total acquisition cost means the price plus stamp duty, registration fee and other purchase costs (see our guide to commercial shop purchase costs in Mumbai). Using the price alone overstates the yield.
Net yield = (annual rent − annual owner costs) ÷ total acquisition cost × 100.
Owner costs typically include property tax, society or maintenance charges the lease does not pass to the tenant, insurance and an allowance for vacancy between tenants. Read the lease to see which charges the tenant pays.
Worked example (illustrative numbers, not a listing). Price Rs 1,50,00,000; purchase costs Rs 9,50,000; total cost Rs 1,59,50,000. Rent Rs 85,000 per month = Rs 10,20,000 per year. Gross yield = 10,20,000 ÷ 1,59,50,000 = 6.4%. If owner costs are Rs 1,20,000 per year, net yield = 9,00,000 ÷ 1,59,50,000 = 5.6%.
Test the lease. Check the tenant name and business; lease start and end dates; lock-in period for both sides; escalation (for example a percentage every three years); security deposit held, which usually transfers to the buyer as a liability; who pays maintenance and property tax; and termination clauses. Income after the lock-in ends is not assured.
Tax on rent. Tenants that are required to deduct TDS on rent will pay you net of that deduction; this is a timing matter, not a cost, but it affects cash flow. Ask your chartered accountant how rental income and any GST registration apply to you.
Resale. The value of a leased shop depends heavily on the remaining lease term and the tenant's strength. A shop with a short unexpired lease can be harder to resell at the same yield.