This is a rental yield calculator and not a quotation under the Consumer Credit Act. All results are based on the figures input.
This calculator does not take into account any ongoing maintenance costs of the property. Mortgage approvals are also subject to validation of income, credit checks and a property valuation.
What Is Rental Yield?
A rental yield is the revenue you earn – or expect to earn – from an investment, expressed as a percentage of the property or asset value. Property investors and landlords use rental yield to measure the value of their investments as they want to know the return on their capital outlay.
How to Work Out Rental Yield
Working out the rental yield for a property is very easy to do. Simply divide your rental income by the property value and then multiply it by 100 to get your rental yield expressed as a percentage.
Formula for calculating rental yield: annual rental income ÷ value of the property x 100 = rental yield
- Your monthly rental income is: £1,300
- Your annual rental income is: £1,300 x 12 = £15,600
- You purchased the property for: £250,000
- Your rental yield is: (£15,600 ÷ £250,000) x 100 = 6.24%
If you’re trying to work out the rental yield of a property you don’t yet own or aren’t yet letting to tenants, then you'll need to use estimated figures for your rental income and possibly the purchase price. To do this, you may want to look at rent and purchase prices for similar properties in the same area of the property you're looking to buy. If you're entering expected or estimated figures then bear in mind that your rental yield may change.
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