Comments on: Calculating The Rental Yield To Find The Wiser Investment

By: Peter whiteman

Peter whiteman — Sat, 19 Nov 2011 14:57:31 +0000

This is a quick guide to yield which is helpful. But do remember as Mike is making in his post, you need to consider both gross and net yield, could you provide both the gross calculator and a net yield calculator, giving you the ability to put any cost for maintaining the property, landlord insurance etc, which when subtracted give you your net yield. For me this is the real yield to work against.

By: Mike

Mike — Fri, 14 Jan 2011 12:34:10 +0000

Of course, in computing a true yield figure, you would ideally cater for (in addition to the cost of the house)

1) costs of finance setup – booking fee, arrangement fee, valuation, brokers fees
2) legal fees, searches
3) costs of any refurbishment (including your own time)

From the monthly rental return, you should remove

1) costs of finance – repayments/interest
2) costs of compliance – safety checks, repairs, insurances
3) allowance for void periods between lettings.
4) a realistic percentage if your expected mrr is a figure supplied by your property’s vendor!
5) Service costs if applicable
6) Management fees/finders fees if using an agency. Advertising costs if not.
7) Return on your cash if you’d invested it in an isa/other opportunity instead – IE the cost of the money you invested.

Don’t these costs mount up quickly? I probably forgot a few too!

By: Jonathan Wood

Jonathan Wood — Wed, 17 Nov 2010 23:52:04 +0000

Interesting approach to evaluating rental properties. Normally, I use a tool like http://www.realestateprofitcalc.com , which focuses on the monthly cash flow. While your calculator doesn’t delve into some of the finer calculations, it is certainly a quick and easy way to compare rental properties.

Thanks.

By: jez

jez — Fri, 05 Nov 2010 00:21:02 +0000

Superb yeild of 13% on repo flat i paid 40k for!

By: adam

adam — Thu, 02 Sep 2010 13:28:38 +0000

Is there any way to work the house price out, having been given the rental yield? Perhaps through some kind of inverse?

By: Matt

Matt — Tue, 05 Jan 2010 10:46:56 +0000

Hi there,

Thanks for the very useful tool

As many landlords (including myself) will not be buying properties with 100% cash, how do you incorporate mortgage costs when deciding yield?

Do you subtract your mortage service costs from the rental income?

And how do you reflect the difference between interest only and repayment? Do I still need to calculate some form of cost for a repayment vehicle if I use interest only?

Many thanks

Matt

By: dvdfrost

dvdfrost — Mon, 30 Nov 2009 14:58:09 +0000

Great calculator!
so i have a yield of 9.615
but no one will give me a remortgage!!!!
God bless the banks