what is a decent rental yield?

So what is considered a "good yield for your rental property? In a perfect world, 7-8% would be the ideal rental yield. However, things are a little more complicated.

what is a decent rental yield?

So what is considered a "good yield for your rental property? In a perfect world, 7-8% would be the ideal rental yield. However, things are a little more complicated. Typically, a property with a high rental yield implies that it is undervalued or below market value. This is usually considered to be between 8 and 10%.

Whereas a property with a low rental yield, which is between 2-4%, can mean that it is overvalued. Yes, many aspire to a property that has a rental yield of around 7%. But you also have to have a good location, good capital growth and good tenant demand. For example, sometimes people inherit a house and are unsure whether to use it as a rental property or put it up for sale.

By knowing the potential yield of the house as a rental property, heirs can make a better decision about renting or selling. The answer to what is a good rental yield depends on where you plan to buy. Currently, the best rental yields in the UK are found in Nottingham, which achieves an average rental yield of up to 12%. There are several methods of calculating the rental yield of an investment property.

Rental yield is essentially the amount of money you earn on an investment property by measuring the gap between your overhead costs and the income you receive from renting your property. The Cloudhouse rental calculator can be used with any single-family home, even if the home has never been used as a rental. For potential homeowners, looking at average rental yields across the country can help determine what their ideal interests and outcomes may be. Last year, the best rental yields in the UK were found in Nottingham, which currently achieves an average rental yield of up to 12%.

Properties with a high rental yield would be best for investors looking to improve their cash flow. While a good rental yield is extremely important when choosing a buy-to-let investment property, there are, of course, other elements that you will need to balance as an investor. Although there is no defined percentage that is considered a "good rental yield", if you pay a high price to buy and hold a property, you should aim for a rental yield that is high enough to compensate for the costs you have to bear. So if your property was bought for £200,000, and you charge £10,000 a year in rent, you would have a rental yield of 5%.

It is when investors focus too much on other factors of a property (downplaying a good rental yield in their calculations) that they get into trouble. So what is a good rental yield? In general, property investors aim to achieve a rental yield of between 5 and 8%. If an investor sees a property for sale that offers a net rental yield of around 8%, it can mean several things.

Courtney Thomson
Courtney Thomson

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