X

Sign Up

or

By signing up I agree to Property Tribes Terms and Conditions


Already a PT member? Log In

Sign Up

Sign Up With Facebook, Twitter, or Google

or


By signing up, I agree to Property Tribes Terms and Conditions


Already a PT member? Log In

Log In

or


Don't have an account? Sign Up

Forgot Password

To reset your password just enter the email address you registered with and we'll send you a link to access a new password.


Already a PT member? Log In

Don't have an account? Sign Up

  • Buy-to-Let

    Calculating rental yield

    Am I calculating yield correctly? I already own property worth £525,000

    Remortgage and take out equity, 75% LTV

    Investment of £131,250 and mortgage of £393750 (Monthly interest only payment £550)

    Rental : £1750

    Profit: £1750 - £550 = £1200

    12 months profit = £14,400

    Rental Yield = 14400 * 100 / 131250 = 10.97 %

    And if it's correct is it a good yield? I understand maintenance etc are on top.

    0
    0

    Yield is Annual rent divided by the purchase price. In your case it would be (1750 x 12)/525000

    Which is a Gross yield of 4%

    Your calculation seems to be Return on Cash invested, which is taking the annual cashflow divided by the Capital Invested. That more of an ROI figure, not yield.

    Hope that helps.

    0
    0

    Didn't say you were. Yield is based on rent achieved as it relates to the value of your property and you said your property is worth £525K.

    Perhaps Yield is not what you want to calculate?

    0
    0

    ok thanks. So I have calculated ROI - Return on Investment.

    Is 11% ROI good?

    Is 4% Yield good?

    0
    0

    Hope that helps.

    Most people like to buy for 7-8% Yield in General.

    11% ROI - depends on how you define good really.. Beats sitting in the bank at least....

    2
    0

    Jamie, it's very clear from seeing this post and others that you're very switched on with property, and certainly more than most on the financial calculation aspects proven here. 

    While you say that most like to invest for 7-8% yields, how many actually do so?

    There are very few of those opportunities in this country anyway, even in the most high yielding cities, without creeping up the risk curve to student properties and HMO's etc.

    0
    0

    I agree. I can't speak for others but I haven't seen anything yielding that much for a long time. I live in London so you'd be lucky to get 5% really.

    0
    0
    Yeah I have a 4 bed in Wandsworth that does yield 5% (hence why I bought it), but even outside of London, the charts and yield maps I’ve seen are some way south of 7-8%.
    0
    0

    Any chance I can get this spreadsheet emailed to me?


    0
    0

    James - is there anyway i can get a copy / template of the spreadsheet you are using above...it looks pretty detailed

    0
    0