Yield is a measure of the income that an investment property generates. It is calculated as a percentage of the property's value, and it is expressed as a percentage.
There are two main types of yield:
- Gross yield is the total income that a property generates, before any expenses are taken into account.
- Net yield is the income that a property generates after expenses have been taken into account.
The most common expenses that are deducted from gross yield to calculate net yield include:
- Property management fees
- Insurance premiums
- Rates and taxes
- Maintenance costs
Yield is an important factor to consider when evaluating an investment property. A higher yield indicates that the property is generating more income, which can lead to a higher return on investment.
Here are some examples of how yield can be used in property research:
- A buyer can use yield to compare different investment properties. For example, if two properties have the same value, the property with the higher yield will generate more income.
- An investor can use yield to set a target return on investment. For example, an investor might target a net yield of 5%.
- A property manager can use yield to track the performance of an investment property. For example, if the net yield of a property decreases, it could indicate that the property is not generating as much income as it used to.
Yield is a complex concept, but it is an essential part of property research. By understanding yield, you can make informed decisions about your investment property.