Rental yield is the income return rate, over the costs associated, with your investment property.
It’s frequently used as a metric in property data and expressed as a percentage.
The 2 types of rental yield are Gross and Net.
Gross rental yield is worked out with the annual rental
income and the property value:
Annual Rent Income=52 x weekly rent
Property value= purchase or market value
Gross rental yield=Annual rental income/property value x 100
Ie: a property purchased for $390,000 and returns an annual
rent of $26,000 would have a current rental yield of 6.67%.
Gross rental yield does not take into account the expenses
associated with keeping the property.
Net rental yield is a more accurate prediction of rental
You will need to estimate all the costs and expenses
associated with your investment property such as:
Purchasing and transaction costs
Ongoing fees and expenses
Building and pest inspections
Repair and maintenance
Property management/advertising fees (slash
these by using RealRenta)
Loss of rent due to vacancy periods
Once you have added up all these costs, you can use the
following formula to work out the rental yield:
Net rental yield= annual rental income- annual
expenses/total property cost x100
Ie : if the overall purchase price of your property is
$430,000 and the weekly rent is $500 and the annual expenses are $4,500, then
the current rental yield would be 5%.
Are you sick of handing over your income from your investment property
directly to a property manager?
Use RealRenta instead and get your rental income paid directly into
your Bank account!
Thursday, 20 June 2019