Gross yield is the most common metric when comparing rental properties, but also the most misleading. It compares annual rent against price without deducting operating expenses or vacancy.
Cap rate (NOI / price) deducts property tax, community fees, insurance, maintenance and a default cushion. For typical Spanish residential property, the gap between gross yield and cap rate is 1.5 to 2 percentage points.
An asset with a 6% gross yield can show a 4.2% cap rate, completely changing the reading when compared to cost of capital or liquid alternatives.
In Ratio Property Plan we calculate both metrics and present the delta explicitly, alongside the breakdown of every cost component.