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  • Property-a-holics

    Work out yield only on your debt?

    When it comes to yield, it's always a tough one deciding how and when you should measure it, such as:

    1. Should it be purchase price and starting rent?

    2. Purchase price and current rent?

    3. Current price and current rent?

    4. Or how about the amount you have currently borrowed vs. the current rent?

    I'm thinking of the last option now for a realistic view, as everything else is subjective/not of the current standing time-wise.

    Anyone can work out how much they currently owe on a mortgage vs. the current rent, but the other calculations may not be so accurate?

    Any thoughts on the above?

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    Good question .  Where does ROI come into play for you.  I have one property where the yield is ok but the ROI is fantastic ?

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    Yield is one of the most abused words in property investments in my view

    It can have several different meanings .

    Which is ok as long as two people talking about yield understand which yield definition they are using

    ROI supersedes yield as a more accurate term  - and can only be truly determined when you sell

    As that may be 25 years away we tend to make do with a mish mash of calculations in the intervening years

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    Jonathan Clarke. http://www.buytoletmk.com