Rental Yield Calculator
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Rental Yield Calculator: Calculate The Return From Your Investment
We welcome you to our Rental Yield Calculator, it is a potent application made for real estate investors in order to determine the rental profitability of the property that they are renting out. In case you are a novice investor or an experienced investor who owns a couple of properties, determining the rental yield on the property is crucial no matter what as without doing so it is really hard to make proper decisions.
What is Rental Yield?
The Rental Yield is one of the most important determinant factors when it comes to assessing a rental property. It is the ratio of net rental income or fair rental value of the asset to its value or cost ultimate purchase price. Whenever you have the rental yield information with you, it informs you whether you have invested in a worthy property or you should change your investment strategy.
Formula to Calculate Rental Yield
In order to come up with rental yield, the formula below is helpful:
Rental Yield = (annual rent income/property value) x 100
Also, Rental Yield=( Property Value / Annual Rent Income) x 100
Where: Annual Rent Receivable is the sum total of rent that you expect to receive in a financial year. Property Value is the value at which you intend to purchase or the amount you want to sell the property.
How to Use the Rental Yield Calculator
Provide the purchase price of the property: This is the total cost that you incurred to acquire the asset.
Provide the monthly rental income: This is the total rent that you are collecting monthly from your tenant(s).
All you have to do is click the “Calculate” button: After putting in the figures, simply hit the “Calculate” button to find out the rental yield of your property.
The rental yield calculator would then give you the annual rental revenue and the rental yield percentage as an indication of how much profit the property can generate through rent.
Why would you even care to calculate Rental Yield?
Evaluate the Profit of an Investment: One of the purposes of rental yield is to indicate when the property is providing a reasonable ROI.
When Buying, Compare the Properties: If you are buying more than one property, consider comparing their rental yields so that you can maximize your returns by selecting the best ones.
Supervise the Performance: Set the rental yield as a reference point for assessing the change in the performance of the property in the long run.
An Example will help:
If a property is bought at $300,000, and a rent is paid every month amounting to $1,500, the annual rent income stands at $18,000.
Utilizing the formula presented above:
Rental Yield = (18,000 / 300,000) ×100= 6%
Rental Yield=( 300,000/18,000 )×100=6%
In such a case, rental yield stands at 6%, which indicates that the rental income after the end of the year is worth 6% of the property.
FAQ
- What’s Considered a Good Yield Rate For Rental Property?
A good rental yield typically falls in a range of between 5-8% but this depends on the property location and type of real estate. Yields are generally low in properties where there is high demand, while yields are high in properties in areas that are not fully developed.
- How can I increase rental yield on my property?
There are several ways to ensure you have an impressive rental yield on your properties. You can raise your rent, cut down on your expenses towards the property or target areas with property rentals that have high growth potential.
- Should I be concerned about anything else other than the rental yield while acquiring a property?
You should be indeed concerned about a lot of parameters not just rental yield, other factors such as the location of the property, its prospects, needed upkeep of the property and its attractiveness for the capital appreciation in the long term.
- And Does the rental yield take any expenses into account?
No, the rental yield rate does not take into account any such expenses such as maintenance of the property, insurance of the property, taxes on the property, or property management expenses. In order to accurately assess the net return yield, these expenses will have to be deducted from the received rental price.
- Should one expect rental yield to be constant over time as it was in the past?
Indeed, rental yield cannot be regarded as static for all time since property prices, rent amount and maintenance costs can alter it. It is necessary to continually assess your rental yield to verify that your investment is effective.
One should check their rental yield right now!
So as to estimate your rental yield on investment property, please use our calculator for rental yield in the section above. Knowing the rental yield of your assets guides you to make better investment decisions and increases your profits.