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**From:**E L

Greetings All

I know the calculation of rental yield has been covered in significant detail on the forum, but I came across a formulae which varies somewhat and was included in information on a property organisation's website.

The formulae I've been using is rent x 52 divided by purchase price x 100. And to get a VERY ROUGH calculation of a 10% yield you basically need the purchase price to be half the rent. ie. rent at $250 and price $125k.

NOW, I might be wrong in my calculations but the information I downloaded from www.brisbanepropertyinformation.com.au has a slightly different variation on the formulae.

It is rent x 90% x 5000 divided by purchase price. Using above figures - rent $250 and purchase price $125k, I get a discrepency of 1.4% which is quite significant.

The only thing I can think of is, the latter formulae is more conservative and factors into account a safety net for the investor. Would the $5000 take into account purchase costs etc - but wouldn't this vary somewhat depending on price??

Look forward to hearing people's comments and thoughts.

Cheers

EL

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