is the income return rate over the costs associated with your investment
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
You will need to estimate all of the costs and
expenses associated with your investment property such as:
•Purchasing & transaction costs
•Ongoing fees and expenses
•Building & pet inspections
•Repair & maintenance
•Property management/advertising fees ( *slash
these using RealRenta)
•Loss of rent due to vacancy periods
Once you have added up all of these costs, you can
use the following formula to work out the net rental yield:
Net rental yield= Annual rental income- Annual
Expenses/Total Property Cost x 100
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%.
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investments directly to a Property Manager?
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Thursday, 28 May 2020