Are you thinking of investing in property?

March 13, 2022

When investing in property one number to consider is Rental Yield.

What Is Rental Yield?

Rental yield is the return an investor is likely to achieve on a property through rent. It is a percentage figure, calculated by taking the yearly rental income of a property and dividing it by the total amount that has been invested in that property.

Why Rental Yield Matters

When it comes to investing in property, achieving a good rental return is of paramount importance.

If your income falls short of your expenditure then you lose money. If you are breaking even then you are not making any money. And, if your income doesn't leave room for surprises then a broken boiler or a problem with a roof can put you seriously in the red.

"Long-term sustainability" should be the watchwords of any buy to let investment.

Making sure that the property pays for itself month-by-month is far more important than securing a discount when you bought it, or some theoretical profit when you sell.

What Is A Good Rental Yield?

In our experience, a good rental yield for buy to let property is 6% or more. Anything under that and there might not be enough cash-flow in the property to cover running costs, mortgage payments and those unforeseen, expensive problems that will crop up when you invest in a property.