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  • Property Yields

    Net Yield Calculation

    Hi

    For example the cost of a property is 54,000 GBP and the annual rental income is 6000 GBP, so the yield is 11.11% , however, how could i estimate other costs roughly? like the insurances, damages, property management fees and any other fees?

    My perspective is to deduct 30 (role of thump)%(aforementioned cost) to the total yield, so the net yield is (1 - 0.3) x 11.11= 7.7% net yield

    my question is 30% is more or less role of thump to calculate all fees, before you reply i know it is case by case scenario and we cannot depends on a specific percentage, but all i want to role of thump percentage for this

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    Are you managing it yourself (management charges)? Are you mortgaging it (mortgage interest)? Is it a flat (service charges and ground rent)? Will it attract good tenants (maintenance, voids, legals for eviction, RGI)? Landlords insurance? Buildings insurance? Contents insurance? Accountancy fees?

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    i know the answer is (it depends) but i am asking for a wide role of thump figure, not a specific and accurate calaculation

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    You won’t get it with any accuracy at all if you don’t consider management fees, mortgage interest or service charges, they all make a significant difference if included/excluded

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    Just thought I'd point out your spell check seems to be repeatedly changing the popular vernacular phrase 'rule of thumb' to the somewhat mysterious 'role of thump'.   :-)

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