I met an investor in Boucherville last week who was sure his triplex was returning 7 %. After checking his numbers, it was 4.2 %. He hadn't subtracted real expenses. It's more common than you think.

The problem: everyone talks about yield, but nobody calculates it the same way. Real estate agents inflate the numbers, speculators ignore expenses, and serious investors waste time sorting through the real story. Let's clear it up.

What exactly is gross net yield?

Gross net yield is simple: it's how much money you make as a percentage on your total investment. Nothing complicated. But there's gross, there's net, and there's what people think it is.

Gross yield is just rent divided by your initial investment. For a duplex worth $400,000 that generates $24,000 in annual rent, that's 6 %. But wait, you have to pay for things.

Net yield is after you subtract real expenses: property taxes, insurance, maintenance, vacancy rates, bad debts, management fees if you're not doing it yourself. That 6 % gross can quickly become 3 % net.

Why the calculations you're sold are wrong

The sellers — real estate agents, brokers, online ads — they often calculate gross and stop there. Why? Because it's bigger and it sells more.

Even worse, some forget expenses intentionally or don't know them. In Longueuil, I saw listings that counted $0 annual maintenance on a 1985 duplex. That was wild.

Others do a pseudo-smart calculation: they only subtract mortgage interest but forget taxes, or they mix depreciation with real expenses. The result: a circus of numbers.

If you let someone else sell you the numbers, you're buying someone else's problems.

The real calculation: example in Boucherville

Let's take a real triplex in Boucherville. Price: $450,000. Down payment: $90,000 (20%). Annual rent: $30,000.

Gross yield on down payment: $30,000 ÷ $90,000 = 33 %. Looks good? Yes. Realistic? No.

Now, annual expenses: property taxes ($4,500), insurance ($1,800), maintenance and repairs ($2,400), management ($1,800), vacancy 5% ($1,500), water damage and surprises ($1,000). Total: $13,000.

Gross cash flow: $30,000 - $13,000 = $17,000. Net yield on down payment: $17,000 ÷ $90,000 = 18.9 %.

But wait, you also have to count the mortgage. Annual payments: $20,000 (interest + principal). Actual cash flow after mortgage: $17,000 - $20,000 = -$3,000.

That's why we talk about cap rate: it's net yield BEFORE financing. Here: ($30,000 - $13,000) ÷ $450,000 = 3.8 %. That's the real cap rate for the triplex.

How financing changes your game

Cap rate tells you what the building returns, regardless of how you finance it. 3.8 % in Boucherville is solid for residential. In Longueuil, it depends a bit on the area.

But here's the real deal: if you put more down (30 % instead of 20 %), you borrow less, your payments drop, and your personal cash flow improves. If you put less down (10 %), you borrow more, payments rise, and it can become negative or very tight.

For financing multiple rental properties (duplexes, triplexes, quadplexes), banks are a bit tougher than with single-family homes. They often ask for more down, and rates can be slightly higher. It's normal.

Your three numbers to always ask for

If you're looking at a rental property gross net yield somewhere on the South Shore, ask these three questions and write down the answers:

1. What's the cap rate (net of all expenses)? If they won't give it, red flag. 2. What are taxes, insurance, and maintenance really costing annually? 3. What's the real cash flow after the mortgage?

If answers are vague, keep looking. Good investments have solid numbers. In La Prairie or Saint-Lambert, the best deals are often the simplest to explain.

We can help you validate your numbers before you sign. That's a big part of what we do. No question marks on your rental property yield when we close.