what is considered a good 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 considered a good 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 need to have a good location, good capital growth and good tenant demand. This is because rental yields are affected by a number of other factors, such as the balance between risk and reward.

It is when investors focus too much on other factors of a property (downplaying the importance of a good rental yield in their calculations) that they run into problems. HMOs seem to be the best investment option, but I would have to wait for those properties to come on the market and in the meantime, great rental yields and capital growth; I need to increase cash flow now and I have the cash sitting doing little in the bank. Investing in rental property is a great new venture for many people who have never considered property investment before. On the other hand, the net rental yield (also known as the capitalisation rate or cap rate) measures the return on a rental property after deducting operating expenses.

With these updates, investors can calculate a rental yield that more accurately measures profitability. In fact, experts advise against making rental yield the only consideration when investing in a property. There are several different methods for calculating the rental yield of an investment property. If you want to invest in a property, it is important to understand what rental yield is and how it works, to ensure a good return.

I have found that there are many misconceptions about what rental yields actually tell us when selecting a property as a suitable investment. Ideally, investors should be able to match rental yield with capital growth and maintain balance in their portfolios over the long term.

Courtney Thomson
Courtney Thomson

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