Afik HanahalYield in real estate
In short
Yield answers "how much does my money earn per year". An investment apartment renting for NIS 5,000 a month on a NIS 2 million price yields 3% gross. Land yields nothing until sold - there the profit is the price difference.
The professional explanation
Gross yield = annual rent ÷ purchase price. Net yield deducts expenses: purchase tax, legal and brokerage fees, maintenance, insurance, income tax on rent (per the chosen track) and vacancy periods.
In Israeli residential property the running yield is relatively low (typically 2%-4% gross) and most historical profit came from appreciation. Commercial property yields more but with more risk.
For land and plots only "total return" is calculated: (sale value minus purchase, holding, levy and tax costs) ÷ investment, divided by years held. A high paper return does not remove the risk of zero.
Example from the field
An investor compared a Kfar Saba apartment at a 3% running yield to an agricultural parcel with no running yield. The land offered higher potential but no cash flow and no certainty - the decision depends on horizon and risk tolerance.