If you are buying property as investment, besides projected capital appreciation, you need to understand how to calculate rental yield. As an investor, you must find invest into higher rental yield/return on investment property.
Calculate rental yield
Rental yield is calculated based on the annual rental income divided by total amount of cash outlay. Do note that you need to minus off all the cost to get the nett rental yield.
Calculate rental yield when buying property with full cash
Example 1 (property A):
Property price: USD 200,000, gross rental: USD 1,000/month, other cost (maintenance, agent fee, etc): USD250/month
Gross rental yield = 1000 * 12/200,000 = 6%
Nett rental yield = (1000 - 250) * 12/200,000 = 4.5%
Example 2 (property B):
Property price: USD 250,000, gross rental: USD 1,500/month, other cost (maintenance, agent fee, etc): USD 500/month
Gross rental yield = 1500 * 12 / 250,000 = 7.2%
Nett rental yield = (1500 - 500) * 12/250,000 = 4.8%
Based on the 2 example above, property B is a better investment because it offers higher nett rental yield compare to property A.
Calculate rental yield when buying property with loan
Using back the example above, now we are taking 70% loan. You need to calculate rental yield using your cash outlay instead of the full property price
Example 1 (property A):
Property price: USD 200,000, gross rental: USD 1,000/month, other cost (maintenance, agent fee, etc): USD250/month, interest cost: USD 100/month
Cash outlay 30% = USD 60,000
Gross rental yield = 1000 * 12/60,000 = 20%
Nett rental yield = (1000 - 350) * 12/60,000 = 13%
Example 2 (property B):
Property price: USD 250,000, gross rental: USD 1,500/month, other cost (maintenance, agent fee, etc): USD 500/month, interest cost: USD 250/month
Cash outlay 30% = USD 75,000
Gross rental yield = 1500 * 12 / 75,000 = 24%
Nett rental yield = (1500 - 750) * 12/75,000 = 12%
Based on the 2 example above, property A is a better investment because it offers higher nett rental yield compare to property B.
The Bridge @ Phnom Penh – 70% Rental Guarantee
- Blue Ocean Investment - The Only Shopping Mall Space and Restaurant For Investment
- Freehold
- Public Listed Singapore Developer - Oxley International
- 70% Rental Guarantee In USD
- Most Prime Shopping District
- Very Affordable, Only From USD 1xxK
The Bridge Cambodia - Nett 70% Rental Guarantee In USD
SMS/Whatsapp +65-81790465 (Haris Lee) For Presentation and Booking
The Peak @ Cambodia – Sharing the same address with 5 Stars Shangri-La hotel
- Located in the most prime location in Phnom Penh
- First mover advantage - Booming Cambodia economy and property market
- Calculate your rental yield? Guarantee rental return nett 6% per annum for 2 years
- Asset in US Dollar
- Only from USD 19xK and only need 10% down payment where balance is deferred
The Peak Cambodia - Most Luxurious and Iconic Integrated Development In Phnom Penh
Built by Singapore public listed developer, Oxley International
Royal Wharf @ New London Business/Financial District
- Expected rental yield around 5%
- Analyst expects price will rise by 50% by 2018
- Mega township development concept (apartments, townhouses, piazzas/parks, offices, restaurants, bars, cafes, school)
- Jointly developed by 2 top developers, Oxley International and Ballymore
- Walking distance to DLR, Crossrail, River Taxi, Excel London, Asian Business Port, and many more.