Rental Yield Calculator
How to calculate rental yield?
Rental yield is a measure of how much income a property generates as a percentage of its purchase price. It is a useful metric for investors to consider when evaluating investment properties, as it can help them to compare different properties and make informed decisions about where to invest their money.
What is rental yield?
Rental yield is a measure of how much income a property generates as a percentage of its purchase price. It is a useful metric for investors to consider when evaluating investment properties, as it can help them to compare different properties and make informed decisions about where to invest their money.
Read more in our "What is a Rental Yield" article.
Read more in our "What is a Rental Yield" article.
How do I calculate rental yield?
To calculate rental yield, you will need to know the following information:
* The purchase price of the property
* The annual rental income from the property
* Any annual expenses associated with the property (e.g., property taxes, insurance, maintenance)
Once you have this information, you can use the following formula to calculate rental yield:
rental yield = (annual rental income - annual expenses) / purchase price * 100
For example, if you purchase a property for $500,000 and it generates $25,000 in annual rental income, and you expect to have $5,000 in annual expenses, then your rental yield would be 5%.
rental yield = (25,000 - 5,000) / 500,000 * 100 = 5%
What is the difference between gross rental yield and net rental yield?
Gross rental yield is calculated by dividing the annual rental income by the purchase price of the property. Net rental yield is calculated by dividing the annual rental income by the purchase price of the property, minus any annual expenses.
In general, net rental yield is a more accurate measure of the income generated by an investment property, as it takes into account the cost of owning the property. However, gross rental yield is a simpler calculation and can be a useful starting point for comparing different properties.
What is a good rental yield?
A good rental yield will vary depending on the location of the property, the type of property, and the condition of the property. In general, properties in high-demand areas with strong rental markets tend to have higher rental yields.
A good rule of thumb is to aim for a rental yield of at least 5%. However, if you are looking for a more passive investment, you may want to aim for a higher rental yield.
In general, net rental yield is a more accurate measure of the income generated by an investment property, as it takes into account the cost of owning the property. However, gross rental yield is a simpler calculation and can be a useful starting point for comparing different properties.
