Rental yield is the single most useful number for judging whether a Kenyan rental property is a good investment. It tells you what income the property produces relative to what it costs — so you can compare a two-bedroom in Kilimani against a bedsitter block in Ruaka on equal footing. This guide shows you how to calculate rental yield in Kenya, step by step, with a worked example in shillings.
Gross rental yield
Gross yield is the quick version — income before costs:
Gross yield (%) = (annual rent ÷ property price) × 100
Example: a two-bedroom apartment bought for KSh 8,000,000 that rents for KSh 55,000/month earns KSh 660,000 a year. Gross yield = (660,000 ÷ 8,000,000) × 100 = 8.25%. (Figures are illustrative.)
Net rental yield (the honest number)
Gross yield ignores the cost of actually running the property. Net yield subtracts those first, and it is the figure serious investors use. In Kenya the costs to include are:
- Monthly Rental Income (MRI) tax — 7.5% of gross residential rent for landlords in the KSh 288,000–15,000,000 annual band. See our what is MRI tax explainer or the MRI tax calculator.
- Service charge — for apartments and gated schemes.
- Management / agent fees — typically a percentage of rent collected (see property management fees in Kenya).
- Vacancy allowance — budget for the weeks a unit sits empty between tenants.
- Maintenance & repairs, insurance, and any loan interest.
Net yield (%) = ((annual rent − annual costs) ÷ property price) × 100
Example: take the same KSh 660,000 annual rent and subtract KSh 180,000 of costs (MRI tax, service charge, management, vacancy, maintenance). Net income = KSh 480,000. Net yield = (480,000 ÷ 8,000,000) × 100 = 6.0%.
What counts as a good rental yield in Kenya?
There is no single "right" number — it depends on the area and property type. As a rule of thumb, higher-yield areas trade some capital growth for stronger cash flow, while prime areas do the reverse. For area-by-area figures with sources, see rental yields in Nairobi by area. Always compare net yield, not gross, and factor in expected capital appreciation for the full picture.
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Frequently asked questions
It varies by area and property type. Compare the net yield (after MRI tax, service charge, management fees, vacancy, and maintenance) rather than the gross figure, and weigh it against expected capital appreciation. See our Nairobi yields-by-area guide for sourced ranges.
Gross yield is annual rent divided by property price. Net yield subtracts running costs (MRI tax, service charge, management fees, vacancy allowance, maintenance, insurance) first, so it reflects what you actually keep.
Yes — for a true net yield, include the 7.5% Monthly Rental Income tax if your annual residential rent falls in the KSh 288,000–15,000,000 band. Use the MRI tax calculator to get the exact amount.
Either is valid, but be consistent. Purchase price shows the yield on what you paid; current market value shows the yield your capital is earning today.