yield qus

[john doe]

Hi everyone

These are very basic questions concerning yield, so I'm showing my beginner status. But I really wanted to know:

1. Is yield simply = total rent for the year/total price for the property ?
Or do you have to take ou the costs of running the property from the total rent in order to better reflect the yield. Likewise, if you borrowed all of the money for the price of the property PLUS costs, do you add the costs into the equation too???

2. How do you find the historical yield for a particular suburb. eg, say the yield for the past 3 to 5 years.

Thanks in advance

John

 

[XBenX]

1/. yes this is the gross yield (simply rent X52 / price)
2/. Property data firms such as residex (who also publish in API mag

 

[WillG]

Yield or 'gross yield' are just figures that are widely used. It can be used to give you a 'quick check' on the affordability of a property. Similar to 'Return on Investment'.

I find that the cost of running the property (Prop Manager, Rates, Insurances, misc ...) costs between 25 & 30% of the rent. A 'rule of thumb' that may be usefull to you.

 

[john doe]

Thanks guys. Much appreciated

John