![]() ![]() The type of tenants that a property attracts can also have an impact on rental yield. The older property will require more maintenance and repairs, which can increase operating expenses and decrease rental yield. Similarly, a property with modern amenities is likely to have a higher rental yield than an older property. ![]() If your property is managed by a property management company with a good track record for timely maintenance and repairs, then it is likely to have a higher rental yield than a property in the same area that is self-managed with a history of delayed maintenance and repairs. Read: Mortgage myths busted – Demystifying the difference between an equitable mortgage and a registered mortgage in IndiaĪ property that is managed effectively, with regular maintenance and prompt repairs, is likely to have a higher rental yield than a property that is poorly managed. Proper maintenance also helps attract better tenants, and retain tenants and will result in higher rental yield. Properties that are too large or too small for the local market may have lower rental yields.įor example, the rental yield in Bangalore’s Whitefield for a large bungalow may be lower than that for a small apartment in a prime location like Indira Nagar due to lower demand for large properties in the former area and higher demand for smaller properties in the latter area. Property Type and Sizeĭifferent types of properties, such as single-family homes, apartments, or duplexes, can also affect rental yield. Properties located in desirable areas such as major cities or near commercial hubs tend to have higher rental yields than properties located in less desirable areas.įor example, a flat in a prime location such as South Mumbai’s areas like Colaba or Marine Drive is likely to have a higher rental yield than a flat in a relatively remote area like Mulund or Borivali. Here are the key factors that will influence your rental yield 1. Read: TDS on Purchase of Property and the Way You Can Use It to Your Advantage 5 Factors that Affect Rental Yield While gross rental yield is useful for initial analysis, net rental yield offers a more realistic picture by considering expenses. ![]() It provides a more accurate representation of the property’s profitability.īoth types of rental yield calculations serve different purposes and help investors assess the financial viability of their investment properties. Net Rental Yield: Net rental yield accounts for the property’s expenses, including maintenance costs, property taxes, insurance, and management fees.It provides a general overview of the property’s potential return before factoring in expenses. Gross Rental Yield: This calculation considers the total rental income generated by the property, ignoring any expenses or costs associated with owning and managing the property.There are two primary types of rental yield calculations: This formula allows you to determine the percentage return on your investment based on the annual rental income generated by the property and its market value. Gross Rental Yield = (Annual Rental Income / Property Value) x 100 To calculate rental yield, you need to follow a simple formula: Multiply the result by 100 to get the rental yield percentage.Divide the annual rental income by the property value.Find the current market value of the property.Determine the annual rental income generated by the property.Here, we will guide you through the process of calculating rental yield and provide insights into its significance in the Indian real estate market. Rental yield helps you understand the potential return on your investment property and assists in making informed decisions. How to Calculate Rental Yield?Ĭalculating rental yield is an essential step for both seasoned investors and first-time buyers in the real estate market. ![]() A higher rental yield indicates a better investment as it means the property is generating a higher return on investment. ![]()
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