Calculating rental yield is crucial for real estate investors to assess the performance of a property compared to others.
If you’re embarking on your property investment venture and feel unsure of how to commence, your JDL Finance Australia broker can offer expert guidance to initiate the process. You might even leverage the equity in your existing home to facilitate the purchase of your investment property.
If you earn $30,000 annually in rent and the property is valued at $750,000, your gross rental yield is calculated as follows:
$30,000 ÷ $750,000 × 100 = 4%
So, the gross rental yield for this property is 4%.
o calculate the net rental yield accurately, you’ll need to follow these steps:
1. Add up all the fees and expenses associated with owning the property.
2. Sum up the annual rent you receive from the property.
3. Subtract the total expenses from the annual rent.
4. Divide the result by the value of the property.
5. Multiply by 100 to get the percentage.
For example, if you receive $30,000 annually in rent, pay $10,000 each year in property-related expenses, and the property is worth $500,000, the calculation would be: Net rental yield = ($30,000 – $10,000) ÷ $500,000 × 100 = 4%
So, the net rental yield for this property is 4%
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