Feb 20 2020 09:51:00

Some useful guidance for landlords and investors regarding the importance of Rental Yields.

What is rental yield?

Rental yield is the return a property investor is likely to achieve on a property through rent. It is a percentage figure, calculated by taking the yearly rental income of a property and dividing it by the total amount that has been invested in that property.

What Is a Good Rental Yield?

When investing in property the most important thing at play is your ability to calculate rental yield. Whether you are new to investing in property or a landlord with a number of properties under your belt, it doesn't matter - calculating the rental return on your properties is something that you cannot overlook.

Why Rental Yield Matters

When it comes to investing in property, achieving a good rental return is of paramount importance.

If your income falls short of your expenditure then you lose money. If you are breaking even then you are not making any money. And, if your income doesn't leave room for contingencies then a broken boiler or a problem with a roof can put you seriously in the red.

"Long-term sustainability" should be the watchwords of any buy to let investment.

To calculate, take the 'Annual rental income' and minus the 'Annual expenses or loss of rental income' from this. Then divide this number by the 'Property value' and multiply this number by 100.