1. What is Rental Yield?

Rental Yield is a financial metric used by real estate investors to evaluate the profitability of an investment property.

2. How Does the Calculator Work?

The calculator uses the Rental Yield equation:

Where:

• \( RY \) — Rental Yield (%)
• \( ARI \) — Annual Rental Income ($)
• \( PV \) — Property Value ($)

Explanation: The equation calculates the percentage return on investment based on annual rental income relative to the property value.

3. Importance of Rental Yield Calculation

Details: Rental Yield is crucial for real estate investors to compare different investment properties, assess profitability, and make informed investment decisions.

4. Using the Calculator

Tips: Enter Annual Rental Income and Property Value in dollars. Both values must be positive numbers greater than zero.

5. Frequently Asked Questions (FAQ)

Q1: What is a good rental yield percentage?
A: Generally, a rental yield of 5-8% is considered good, though this varies by location and property type.

Q2: Does rental yield include expenses?
A: No, this is a gross rental yield calculation. Net rental yield would deduct expenses from the annual income.

Q3: How often should I calculate rental yield?
A: It's recommended to calculate rental yield annually or whenever considering a new property investment.

Q4: Can rental yield be negative?
A: No, rental yield is always positive as it's based on income and property value, both of which are positive values.

Q5: How does rental yield differ from ROI?
A: Rental yield focuses on income return relative to property value, while ROI considers total return including capital appreciation.