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Gross Yield vs Net Yield
This is the number that decides whether your Tokyo purchase is a real investment or a slow leak. Gross yield (hyomen rimawari, the headline 'surface' return) is the figure splashed across every listing: annual rent divided by price, full stop. Net yield is what actually lands in your account after the costs that the listing conveniently forgets. The gap between them is not a rounding error - it is the difference between the deal you think you are buying and the deal you are actually buying. Foreign buyers get burned here more than anywhere else, because the listing number is designed to look good to someone who does not know what it omits.
| Aspect | Gross Yield (hyomen rimawari) | Net Yield |
|---|---|---|
| What the number actually measures | Annual rent / purchase price. Clean, simple, and tells you almost nothing about cash flow. | Rent minus real running costs / total acquisition cost. The number you can actually spend. |
| Costs it ignores vs includes | Ignores management fees, building reserve fund and management dues (kanrihi/shuzenhi), property tax, insurance, vacancy, and re-letting costs. | Subtracts all of them - typically eating 1.5 to 2.5 points off the headline on a Tokyo condo. |
| Acquisition cost reality | Uses the sticker price only - ignores the roughly 7-9% in purchase costs (taxes, agent fee, registration). | Built on total cash in, so the first-year drag from acquisition costs is visible and honest. |
| Where it misleads most | Regional 'high-yield' listings (think 8-10% in Gunma): the surface number is a trap when vacancy and management swallow it. | Reveals why a 4% central Tokyo unit can beat an 8% regional one once costs and vacancy are real. |
| Who quotes it to you | The seller and the listing portal - because a bigger first number sells faster. | Nobody volunteers it. You, or an honest agent, have to build it from the rent roll up. |
| Use in a real decision | Fine as a 30-second filter to shortlist - never as the basis for a buy. | The only figure that should sit in your underwriting model before you wire money. |
The verdict
Use gross yield to screen, never to decide. It is a sorting tool - quick, dirty, and fine for throwing out obvious dogs in a list of 50 listings. But every actual buy decision lives or dies on net yield. If a seller or agent only ever quotes you the hyomen rimawari and goes quiet when you ask for the running costs and vacancy assumptions, that silence is your answer. Build the net number yourself: subtract management dues, reserve fund, property tax, insurance, a realistic vacancy allowance, and re-letting costs, then divide by your all-in acquisition cost. A central Tokyo unit at a modest gross often keeps more of its yield than a flashy regional one - that is the whole game, and it only shows up in the net.