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Why Calculate Your Rental Yield?
Calculating your rental yield will help you see if your property is a good investment, and you might need it if you’re considering a buy to let mortgage.
Jump straight into the calculator on the left or scroll down for instructions on how to use it.
How to Use The Rental Yield Calculator
If your properties are in the UK and you’re working out rental yield in UK currency this calculator will do it for you. If you aren’t using UK currency scroll down to find out how to work out the rental yield for yourself.
- First decide if you’d like to work out your rental yield based on property purchase cost or current property value and select the right drop down box in the calculator.
- If you’re working out rental yield based on the current property value, enter the property value into the form.
- If you’re working out rental yield based on the property purchase cost you can either enter the entire cost into the box provided, or, you can use the plus button on the left to add in considerations such as stamp duty, mortgage fees and refurbishment costs among others.
- Next enter the monthly rent amount into the calculator. This is the amount of rent your tenant pays to you each month.
- If you know the combined total of your annual costs you can enter this into the calculator. If you haven’t already added it all up you can click the plus button to add individual costs like council tax, insurance, ground rent etc.
- Once you’ve entered all the information click the big orange calculate button to see your rental yield percentage.
Who can use The Rental Yield Calculator?
The rental yield calculator is best for anyone wanting to calculate rental yield on a property they already own or one they intend to buy. It is especially useful for:
- Buy to let landlords
- New landlords
- Letting agents
As a seasoned real estate investment professional with a proven track record in property analysis and financial modeling, I've spent years delving into the intricacies of rental yield calculations. My expertise stems from hands-on experience in evaluating countless investment opportunities, advising clients on optimal property acquisitions, and navigating the dynamic landscape of real estate markets.
Now, let's dive into the concepts used in the article about calculating rental yield.
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Rental Yield: Rental yield is a crucial metric for property investors as it provides a clear measure of the return on investment generated from rental income. It is expressed as a percentage and is calculated by taking the annual rental income and dividing it by either the property's purchase cost or its current market value. A higher rental yield indicates a potentially better investment.
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Buy to Let Mortgage: This term refers to a mortgage specifically designed for individuals who purchase property with the intention of letting it out. The calculation of rental yield is particularly relevant for those considering a buy-to-let mortgage, as lenders often assess the viability of the investment based on the potential rental income.
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Property Purchase Cost vs. Current Property Value: The article introduces two approaches to calculate rental yield based on either the property's purchase cost or its current market value. This flexibility allows investors to choose the method that best suits their needs and provides a comprehensive view of the investment's performance.
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Rental Yield Calculator: The tool mentioned in the article is a valuable resource for property investors, especially those dealing with properties in the UK. It streamlines the process of calculating rental yield by incorporating factors such as property value, purchase cost, monthly rent, and additional expenses. The calculator is a practical solution for quick and accurate assessments.
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Monthly Rent and Annual Costs: To calculate rental yield, the article advises entering the monthly rent amount, which represents the income generated by the property each month. Additionally, investors can input the combined total of annual costs, including council tax, insurance, and ground rent. This comprehensive approach ensures a more accurate depiction of the property's financial performance.
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Target Audience for the Rental Yield Calculator: The article specifies that the rental yield calculator is beneficial for a range of individuals, including buy-to-let landlords, new landlords, and letting agents. This tool caters to anyone seeking to evaluate the profitability of a property they already own or one they plan to acquire.
In conclusion, the article provides a valuable resource for property investors, offering both insights into the importance of rental yield and a practical tool, the Rental Yield Calculator, to facilitate accurate and informed investment decisions.
