Property Investors describe annual rental income as the rental yield. It is a particularly useful
measure when comparing different properties and can be a useful target for landlords when
considering future investments.
Gross Yield and net yield
Gross yield is calculated by taking the value of the property when it was purchased versus the rent
that is usually received.
For example, if a property was bought for £200,000 and the rent is £800 a month then the gross
yield is 4.8 percent – that is because £9600 yearly rent divided by £200,000 is 4.8 percent.
The gross yield does not include other costs which a landlord has to pay out such as mortgage
repayments and insurances, it also doesn’t include less regular costs such as management fees,
maintenance and any periods the property is not rented. These costs included would provide the net
CB Estates Top Tips for increasing your rental yield
1 – Invest Wisely
Investing in property requires a lot of hard work, dedication, and research. You will become more
experienced and better equipped with each new purchase. It is always important to treat every new
property as a business decision and carefully study each potential investment as well as negotiating
where possible to maximise your return.
2 – Invest in up and coming locations
Buying property in up and coming towns and cities is another way to maximise return. Towns and
cities where there are plans to regenerate with government investment for example redevelopment
of city centres and new travel links. Buying in these areas will increase capital growth and greater
rental values for the future.
3 – Make your property attractive to tenants
One of the best ways to maximise your return is to minimise the number of times you have to find
new tenants, marketing costs, periods with no rent and wear and tear can all affect your overall yield. By treating tenants like valued customers and giving them a great service and experience will
help ensure they stay there for a long period and treat our investment as their home.
4 – Review your outgoings
The first place to start looking at your outgoings is your fixed costs. This could be looking at interest
rates and looking to see whether there are better mortgage deals available.
This can make a big difference to what you have going out so it is worth checking all products, from
your mortgage to your insurance products to ensure you are on good rates and by shopping around
when your renewal is due.
5 – Carefully selecting tenants
Taking careful steps when choosing a tenant can help reduce costs which are associated with
Ensuring a tenant can pay their rent is extremely important and a positive reference from a landlord
and employer is a must.
Its also good to identify who your potential tenants are and market your property to the correct
audience to get better value from your property.
Using an agent is great for this point because they will manage your property and look for the right tenant for your property. This will allow you to concentrate on finding your next property investment.