Ideas of Yield sought after in property investment continue to be the one area where folks have a pretty fair idea of what they’re looking to. I’ve mentioned this before and, for key calculations, it’s worth mentioning again.
1. Net Yield is taken from the costs to a property and is a ‘fairer’ calculation and value assessment for strategy and planning because everything is included
2. Gross Yield is the income return on an investment before expenses are deducted. The simplest calculation is to divide gross annual rental income by the purchase price, x 100 for a percentage
3. When looking at ROI (Return on Investment), all monies put in (including any mortgage amount taken) is included, variables come in to play and, sometimes, unproven numbers i.e. capital growth.
4. When considering the Tax elements, I’d say a good conversation with a specialist who understands the rules, nuance and when rules change, is needed. We do have a BTL Tax Guide written here, so email us for your complimentary copy
Whichever calculation is deemed the most suitable, it’s a case of each to their own, however, whichever, any is better than none!
Article credit: Copyright SUF © 2019