Calculating The Rental Yield To Find The Best Investment
As a landlord, or more specifically, perhaps a new/upcoming landlord, have you ever been torn between multiple properties? A landlord’s main concern should be buying the property which will offers the best ROI (Return On Investment). Perhaps an important aspect many landlords don’t pay enough attention to, as they’re too busy focusing on the superficials. While that’s not a terrible thing, it’s important to remember why you’re buying the property in the first place- for an investment; to make money! So you want a property that will make you the most income! Richmond Harvey can help you work that out?
John wants to be a landlord, so he’s on the hunt to buy a property. John has seen a property which costs £180,000 with a potential rental return of £775pcm.
What is rental yield?
Yield is a way of calculating the ROI on your BTL; it uses the rental income over the initial cost of buying the property, and is usually expressed as a percentage.
The higher the yield, the better.
Calculating rental yield
Monthly rental return = £775
Investment = £180,000
£775 * 12 = £9,300
£9,300 / £180,000 = 0.0516
0.0516 * 100 = 5.16 % yield
What is a good return yield percentage?
We personally think any property which has a return yield of 5 – 7%+ is extremely good. To make life easier Richmond Harvey have included the calculator below to help calculate your yield…
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|Rental Yield Calculator|
|Rent per month (e.g £750)|
|House price (e.g £150000)|
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