How do I work out yield please?

(400 * 52) / 400000 = 0.052 = 5.2%

 

As DT showed.

(weekly rent) * 52 / (purchase price)

For purchase price, most folks use actual purchase price. Some use how much they paid minus deposit. And others use 105% of purchase price if they borrowed all purchase costs as well.

 

Knowing where you shop, I'd do it.



PS NOT an expert

 

Definitely work it out without deposit - D.T.'s example is simple gross yield.
Allows quick comparison for apples and apples.

You can do all kinds of fancy things for net yield taking into account different expenses like you have listed along with vacany, management fees, estimated maintenance, insurance etc. The list goes on.

What is important is that you compare apples and apples so I like a basic calc like D.T.'s but I minus say 20% from the rent for expenses, depending on property type, when working out rough holding costs. If I need to be more specific than that to make the deal work maybe I should be looking elsewhere.

 

There is gross yield and net yield figures too. Other expenses also need to be considered here beyond property manager and strata fees. Things like maintenance , council, annual vacany allowance (rainy day), insurances etc. Should all be added to your spreadsheet calcs.

 

Use this site and quickly work out yields for all your scenarios: http://propertycalculator.net/calculators/rental-yield.aspx

Purchase price = 5.2%
Purchase price less $3200 in fees mentioned off yearly rent = 4.51%
Loan amount (purchase price less 70k deposit) = 6.3%
Loan amount (purchase price less 70k deposit) less the $3200 in other fees mentioned = 5.47%

 

Gross yield? Net yield? Include financing costs? Anticipated vacancies, maintenance etc? Purchase price? Current value?

For me, there are two main reasons to calculate yield:

1. Comparing properties to purchase. Two properties might have the same gross yield but one may have a better net yield as one might have very high BC fees, for example.
2. Determine whether to hold or sell assets. Can I get a better yield elsewhere? In this case it's very important to use current values.

Of course there are other considerations. I might expect that rents on a currently poorly yielding property are going to skyrocket. Or I might expect a currently good dividend yield on xyz ltd is about to take a nose dive in earnings.

 

This is awesome. Anything that can save time and use on the go. By the way the link above is moving to a new website. Here's the new link:

http://abakus.io/Calculators

Thanks for sharing!

 

Thanks Tyrone, that's a handy calculator

 

'Yield" is what I generally do to my wife's numerous demands

 

Why wouldn't you add the deposit to the calculations?

 

Because yield is a guide which can be used to compare what are otherwise similar properties IMO.
The size of any deposit will obviously alter your after tax return and cash flow but it doesn't alter the basic rent vs price calculation. As others have already commented you could pay cash for a property with no loan but this doesn't alter its yield

 

Please indulge a newbie.

Net rental yield = [(Annual rental income (50 weeks) – Annual expenses) / Total property cost] x 100

My annual expenses are always more than my rental income so I always seem to be getting a negative number. Im hoping im doing something wrong.

Any suggestions?

 

Try taking our mortgage payments in annual expenses?

 

Don't use P&I in your calcs. Just I.

 

Can I suggest an 80k deposit in order to insure 80% LVR? You would probably need to pay LMI based on the numbers you quoted.