Your Property’s Rental Yield
Either you have purchased your property as an investment or for your own residence, the rental yield is a great indicator and future key decision factor in handling your unit. This ratio is the most common used to compare and monitor realty investments, decide to sell, or if you reside at that address – maybe give the property out for rent.
The rental yield ratio is calculated with the formula:
(Yearly Rental Income / Purchase Price) x 100
For a reliable result, having access to accurate historic information doubled by your own research in similar properties in the same area is paramount.
Secondly, total property expenditure cost or total investment, which includes what you have spent for fittings and furniture must be included into the purchase price. Also considering the net yield over gross yield will enhance ratio accuracy. Net yield is calculated by subtracting all expenses from the gross rental income. Expenses here can include taxes, loan rates, advertising for tenants, maintenance, other professional fees, etc.
Calculating the rental yield ratio will tell you how much of an annual return you are likely to get on your investment and should not be taken as a guarantee.
General factors that influence the yield ratio are consumer confidence, politics and the economy, the demand for property constituting a key driver here.
According to the Global Property Guide, current yields in Bangkok Central Business District are moderately good, ranging from 5% to 6.8%, over the past year increasing significantly on the luxury end of the market.
About the Author:
Sorin Gligore has more than a decade of experience in Sales and Entrepreneurship in South East Asia, has completed BA studies in Journalism and Social Studies and a MBA in Hospitality, currently co-owning Shambhala Realty Co., Ltd. in Bangkok