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Property Investment Comparison Sheet for
Calculating Net Yield
Calculating Net Yield is important for knowing what your property is actually returning after expenses (as these vary from property to property).
Firstly take the annual rent and then deduct known expenses such as:
- Rates
- Insurance
- Maintenance
- Body Corporate Fees
- Management Fees
On rare occasions the Landlord may also need to pay for phone and power. Typically this happens when a property is rented out by the room with multiple tenancies. If so deduct these expenses too.
Example of a Net Yield Calculation:
Annual Rent = Weekly rent $350pw x 52 (weeks) = $18,200 pa
Expenses: Rates $1,250 pa
Insurance $ 400 pa
Maintenance $ 500 pa $ 2,150 pa
Net Income ($18,200 - $2,150) = $16,050 pa
For a property valued at $300,000 the Net Yield would be 5.35% i.e.
$16,050 (net income) x 100 divided by $300,000 = 5.35%
Knowing your property's Net Yield will give you a good idea of it's ability to generate a positive cash flow (next months article).
Click here for a very handy "Property Comparison Form" that allows you to easily compare properties.
Special Offer: David Tillman has been an active property investor for 20 years and is a member of the Canterbury Property Investors
Assn. David offers a free 30 minute consultation to current and prospective clients who are looking to invest in property.
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