How do you work out rental yield simply?
N.C.Stone
Hi NC Stone
the way the market works it out is divided the yearly rental by the purchase price and times by 100 to give you the yeild.
eg 150pw x 52 = 7800 per year dividend by 110,000 purchase price x 100 = 7.09% Yeild
It’s not a very good tool but one used by the market, but and is still of some use. Be aware it doesn’t include all the costs associated with the property eg rates, insuarance and interest on loans. But on the other hand it doesn’t include the benifit of leverage, if you can loan money at a rate lower than what your returning it can actually lift the return above the yeild figure.
regards westan
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