PERREN'S PEEK OF THE PROPERTY WEEK
Use net yield instead of gross yield
The simplest way to calculate rental yield is to divide a property’s price by yearly rent- giving you an amount that’s known as “gross yield” But this is the wrong indicator to use.
Gross yield does not take into account any of the costs associated with owning a property- such as the mortgage, the on going spending on maintenance, insurance, service charges, letting agent fees, etc.
Once these costs have been factored in, you end up with “net yield” Calculating the net yield is a far more practical- not to mention realistic way of determining how much your property is making you.
Should you wish to discuss any specific properties or just a general chat re the current market, please contact me on 01306 880 442
Something for the weekend...
£239,950 at £900pcm = 4.5% gross yield (remember to work out your net yield!)