What % rental yield is this?

[Elke]

Hi there
Request help to calc rental yield %.
PP= $290000 in 2007.
Rent pw now = $400.
Rates/strata/water= $4000 pa
Fixed Interest for 5yrs @ 7.5%, now at var 5%.

Ta! What formula to use to calc yield?

 

[spludgey]

Depends whether you calculate your rental yield on the purchase price or the current value.

As you haven't included a current value, I'll go off the purchase price.

Yield= ($400*52)/$290000=7.17%

 

[nhg]

Depends how conservative you are.

I do:

(Rent*52 weeks) / (Purchase Price + Associated Costs + Reno Costs)

As a rule of thumb that would be:

($400*52) / ($290, 000*1.05 + $0 for reno) = 6.8% ROI



For a like for like comparison.

 

[Decimator4000]

Depends how conservative you are.

I do:

(Rent*52 weeks) / (Purchase Price + Associated Costs + Reno Costs)

As a rule of thumb that would be:

($400*52) / ($290, 000*1.05 + $0 for reno) = 6.8% ROI



For a like for like comparison.

Shouldn't you minus all your rates and management fees as well as maintenance. usually equates to 12.5% of weekly rent. Thus it would look like:

($400*52 - 12.5%) / ($290,000 + costs + reno costs) = 5.97%

 

[Singo]

Gross yield = (weekly rent * 52) / (purchase price+purchase costs+Reno costs)

Net yield = (weekly rent * 52 - expenses) / (purchase price +purchase costs+Reno costs)

Expenses include rates, maintenance, insurance, management fees etc. (but dont include interest payments)

The house may be vacant for about 2 weeks per year. So it is better to multiply weekly rent by 50 instead of 52.

(purchase price+purchase costs+Reno costs) may be irrelevant as well. Say the house price has doubled and there is no point using purchase price. If so, "Current market value" should be used.