How to Find Your Yield in Real Estate Investment

“Yield or rental yield can be explained as the potential return on your property investment gained through rent. It is usually a percentage figure calculated using annual rental income and the value of the property. Whether you're an experienced investor or are just starting in the real estate market, finding your yield is an important step in making good investment decisions. As of the beginning of 2024, the average gross rental yield in the United Kingdom stands at 7.03%”
Calculating Your Yield

There are various ways to calculate yield in real estate, with two primary methods being:

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Gross Rental Yield: This calculation involves comparing the property's annual rental income to its property value. The formula for gross rental yield is:

(Annual Rental Income / Property Value) x 100

This formula provides a basic understanding of the property's income-generating potential before considering expenses.

Net Rental Yield: Unlike gross rental yield, net rental yield factors in expenses associated with the property, such as maintenance, taxes, insurance, and management fees. The formula for net rental yield is:

[(Annual Rental Income - Annual Expenses) / Property Value] x 100

This calculation provides a more realistic view of the property's profitability by deducting expenses from the rental income.

You can also use Estate Agent Power's Online Yield Calculator to make decisions on your property investment. Read more about yield here

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