Calculate net rental yield
To calculate net rental yield accurately will involve some extra number-crunching. Follow these steps:
1. Add up all the fees and expenses of owning the property
2. Sum up the annual rent you will receive from the property
3. subtract the total expenses from the annual rent
4. Divide it by the value of the property
5. Multiply by 100
Examples of some of the expenses you might have from your property include:
1. Repairs and maintenance
2. Strata levies
3. Council rates
4. Property management and advertising fees
Do note, interest on your investment loan isn’t usually including when calculating net rental yield. That’s because it relates to your own financial situation – loan interest isn’t directly related to the cost the property generates.
An example of how to calculate net rental yield
Let’s say, you receive $30,000 each year in rent. You pay $10,000 each year in property-related expenses, and the property is worth $500,000.
Your net rental yield is equal to ($30,000 – $10,000) ÷ $500,000 ÷ X 100 = 4%
i.e (Annual rent – costs of owning your property) ÷ The value of the property X 100.