A Phnom Penh one-bedroom priced at $150,000 and let at $1,000 a month is described, almost everywhere it is marketed, as an 8 percent investment. The owner who holds it for a year will typically bank closer to 4. Neither figure is false. They answer different questions, and the distance between them is where most landlord disappointment begins. Gross yield, net rental yield, and real yield are three separate measurements, and treating them as one number is the most common arithmetic error in residential property.
The number on the listing
Gross yield is annual rent divided by purchase price. Twelve months at $1,000 over a $150,000 price is 8 percent. It is the easiest figure to compute and the easiest to compare, which is why it dominates listings, developer materials, and dinner conversation.
It also rests on three quiet assumptions. The unit is occupied every day of the year. It costs nothing to run. And it cost nothing to acquire beyond the price on the contract. None of those hold for any real owner.
Gross yield has one legitimate job, which is screening. It tells an investor which units deserve a second look. It says very little about what the owner will actually be paid.
From gross to net rental yield
Net rental yield is what remains after the asset has been operated for a full year, divided by what it truly cost to own. Applied to the same unit, with illustrative figures typical of a mid-market Phnom Penh condominium, the deductions look like this:
- One month of vacancy between tenants reduces rent collected to $11,000
- Management at 10 percent of collected rent: $1,100
- Co-ownership fees on 60 square meters at $1.50 per square meter per month: $1,080
- A reserve for repairs and furnishing replacement: $900
- Annual immovable property tax: roughly $100
- Rental withholding tax at the 14 percent non-resident rate: $1,540
What reaches the owner is $6,280. The denominator moves as well. The 4 percent transfer tax, plus roughly 1 percent in legal and registration costs, lifts the true acquisition cost to about $157,500. Net rental yield on that basis is 4.0 percent.
Half the headline disappears before a dollar arrives in the owner's account. An 8 percent unit and a 4 percent owner are the same investment, viewed from opposite ends of the lease.
The line most landlords misplace
Tax is usually filed mentally as the owner's problem at year end. In Cambodia it behaves differently. Withholding applies to rent as it is paid, at 10 percent for residents and 14 percent for non-residents. Because it is calculated on rent rather than on profit, it functions as a cost of revenue, not a tax on income.
In the example above, withholding removes almost a full point of yield on its own, more than the management fee and more than the co-ownership charges. The gap between the two rates is worth $440 a year on this unit, or $8,800 over twenty years before any compounding.
The rate is not negotiated with the tenant or the building. It is set by the ownership structure chosen at purchase and follows the asset for as long as that structure stands. The structure decision at signing is, in practice, a yield decision that lasts as long as the title.
Real yield is a question about leases
Real yield subtracts inflation from net yield. A 4.0 percent net return in a year of 2.5 percent inflation leaves 1.5 percent in real terms. Many landlords stop at that subtraction and conclude that residential property is a weak inflation hedge.
The conclusion is premature, because the subtraction assumes rent is frozen. Real yield is better understood as a measure of how quickly an owner's income can reprice.
Recent data makes the point without argument. Cambodia's consumer inflation ran at about 1.3 percent year on year in January 2026 and near 5.8 percent by April, driven largely by imported fuel and transport costs, according to central bank figures. A landlord who signed a two-year fixed lease in January priced it for one environment and is collecting it in another. The costs on the owner's side reprice faster than the lease does. Building fees, repair labor, and replacement furniture all move with the index. Fixed rent does not.
The owners who hold real yield steady tend to share a few habits. They prefer annual renewals or written escalation clauses in the range of 3 to 5 percent. They review co-ownership budgets before approving them rather than after. They treat the furnishing package as a depreciating asset with a replacement schedule, not a one-time expense.
Real yield is not a number an owner calculates. It is a number an owner negotiates, one lease at a time.
Three numbers, three questions
Each figure answers a distinct question. Gross yield asks which units are worth studying. Net rental yield asks what the unit pays. Real yield asks whether that payment will still be worth something in ten years.
Most errors come from using the answer to one question as the answer to another. The most frequent is comparing a property's gross yield against a bank deposit rate. A deposit quote arrives with few deductions between the rate and the account. A property's gross yield arrives with six. Compared honestly, net against net, the gap between the two is narrower than the listing implies, and the case for property rests where it should, on rent that can reprice and a capital base that holds its value in real terms.
The distinction reduces to a single line. Gross yield describes the building. Net yield describes the operation. Real yield describes the decade.
The yield a unit advertises and the yield an owner keeps are separated by line items that can be counted before purchase rather than discovered after it.
Investors who build the net and real case before signing tend to buy fewer units and keep them longer. The spreadsheet looks tedious at the start, and it is usually the reason the holding is still profitable at the end.
At My First Corner, every unit we present to a client arrives with all three numbers calculated from the same assumptions. The conversation is available when it is useful.
