How to Calculate Yield on Investment Property?
No one does not know the income that real estate investment brings to the investor. Real estate, the safest investment instrument, is the first choice of many investors. As an investment instrument that never loses its value, real estate provides different rates of return to the investor depending on various factors. The value of this return also depends on the type of property. If you want to step into a successful future by investing in real estate, of course, you are wondering about the income you will get from your property. So, let us explain how to calculate the return for your investment properties.
Buyers of investment property buy this property either to sell it after a while or to let it out. If you want to buy and rent a property for investment purposes, you have made a great decision. Investing in real estate and earning rental income is very important for big profits.
Return on investment, or ROI for short, shows how much return is earned from that investment as a percentage of the investment cost.
If you purchased your property with cash and want to calculate the return on investment, you must divide the net profit or return on the investment by the original cost.
If you have a mortgage, the down payment and mortgage payment must be taken into account.
Items and regular expenses, such as repair and maintenance costs, are also factors that affect the return on investment.
To understand whether the property you are going to rent will bring you profit or not, the cash income and rental income should be calculated. You can get the result by dividing the annual rental income of the house by the sales price.
Having said all this, let’s remind this. The property you will rent may not be full every month of the year. Sometimes properties are vacant for several months of the year. In addition, you should not forget about the extra costs that may arise for your property. If you take all these factors into account, you will make more accurate calculations.
