Are you thinking of investing in a buy to let property?
You’ll find that rental yield is the metric you need to know about the property, without a strong rental yield you just won’t make a profit and in return you will struggle to secure any mortgage finance.
In basic terms rental yield is the value that the property generates from annual rent. Yields are expressed as percentages.
- Gross yield, this is the overall figure you will make, the capital gain.
- Net yield, gross yield minus any expenses the property has occurred during the past 12 months.
Working out rental yield is actually very easy to do, just follow the rental formula:
Divide your annual rental income by the property value (Price paid not market value) and then multiply the number by 100.
For example if you bought a property for £150,000 and generated annually in rent £9,000 you would need to do the following sum.
£9,000/£150,000 = 0.06 x 100 giving you a yield of 6%
It’s a great tool to use as it can work out the risk factor of the property, you’ll also find a property that offers a good rental yield to be more valuable.
High rental yield locations of 2020
Based on figures from Zoopla back in September 2020 the best three geographical locations for rental yields are Middlesbrough, Glasgow and Sunderland. This will change year on year.
Peregrine Property – Buy to let
At Peregrine Property we work with a number of property investors up and down the country, helping them source the ideal buy to let properties for their own circumstances and portfolio, one of the key things we consider when looking for opportunities is rental yields.
If you have any questions then why not get in touch with us here, your local property, professionals.