1. What is Property Yield?

Property yield, also known as rental yield, is a key metric used in real estate investment to measure the return on investment from rental income. It represents the percentage of return an investor can expect to receive from a property based on its annual rental income and market value.

2. How Does the Calculator Work?

The calculator uses the property yield formula:

Where:

• \( \text{Annual Rent} \) — Total annual rental income from the property ($)
• \( \text{Property Value} \) — Current market value or purchase price of the property ($)

Explanation: The formula calculates the percentage return on investment by dividing the annual rental income by the property value and multiplying by 100 to get a percentage.

3. Importance of Yield Calculation

Details: Property yield is crucial for real estate investors to compare different investment opportunities, assess rental property performance, and make informed investment decisions. It helps determine if a property will generate sufficient rental income relative to its value.

4. Using the Calculator

Tips: Enter the annual rental income in dollars and the property value in dollars. Both values must be positive numbers. The calculator will compute the yield percentage.

5. Frequently Asked Questions (FAQ)

Q1: What is a good property yield percentage?
A: A good yield varies by market, but generally 5-8% is considered decent, while 8-10%+ is excellent. Location, property type, and market conditions affect what constitutes a "good" yield.

Q2: What's the difference between gross yield and net yield?
A: Gross yield uses total rental income, while net yield subtracts expenses like maintenance, insurance, property management fees, and vacancies from the rental income before calculation.

Q3: Should I use current market value or purchase price?
A: For investment analysis, use current market value to assess current performance. For ROI calculation on a specific purchase, use the purchase price.

Q4: How often should I recalculate property yield?
A: Recalculate annually or whenever there are significant changes in rental income, property value, or market conditions.

Q5: Does property yield include capital growth?
A: No, yield only measures rental income return. Total return on property investment includes both rental yield and capital appreciation.