Rental Yield Calculator

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What is Rental Yield?

Rental yield is a key concept in real estate investment. It's a percentage that shows the annual return on an investment property in relation to its market value.

In simpler terms, it's the amount of money you're making from your property each year, expressed as a percentage of the property's cost or value.

Gross vs Net Rental Yield

There are two types of rental yields: gross and net.

Gross rental yield is the simplest to calculate. It's the total annual rental income divided by the property value, multiplied by 100 to get a percentage. It doesn't take into account any expenses related to the property.

On the other hand, net rental yield is a more accurate reflection of your return on investment. It factors in all the costs associated with owning and managing the property, such as maintenance, insurance, and property management fees.

To calculate it, you subtract your annual expenses from your annual rental income, then divide by the property value and multiply by 100.

Expenses to Include When Calculating Rental Yield

When calculating net rental yield, it's important to include all the costs associated with owning and managing the property. These may include:

·       Mortgage repayments

·       Property related council rates and state taxes

·       Insurance premiums

·       Maintenance and repair costs

·       Property management fees

·       Vacancies (lost rental income) 

How to Calculate Rental Yield Manually

To calculate rental yield manually, follow these steps:

1. Calculate annual rental income: Multiply the monthly rent by 12.

2. Calculate annual expenses: Add up all the costs associated with owning and managing the property over a year.

3. Calculate net rental income: Subtract the annual expenses from the annual rental income.

4. Calculate net rental yield: Divide the net rental income by the property value, then multiply by 100 to get a percentage.

In conclusion, understanding rental yield is crucial for property investors. It helps you assess the profitability of your investment and make informed decisions.

Our rental yield calculator can simplify these calculations and provide a quick and accurate estimate of your return on investment. Remember, the higher the rental yield, the better the return on your investment.

Remember that this article provides general information. For specific advice related to your circumstances, consider consulting with a tax professional or financial advisor.