Legal Definitions - income yield

Income yield is a term used in real estate that refers to the amount of income an investment property generates in relation to its value. It is also known as the capitalization rate.

For example, if an apartment building generates $100,000 in annual rental income and is valued at $1,000,000, the income yield or capitalization rate would be 10% ($100,000/$1,000,000).

This metric is important for investors as it helps them determine the potential return on investment for a property. A higher income yield indicates a higher return on investment, while a lower income yield indicates a lower return on investment.