Understanding rental yield is crucial for any property investor. It's a key metric that helps you assess the profitability of a rental property. Essentially, rental yield represents the annual return on your investment property as a percentage of its total cost. This calculation helps you compare different investment opportunities and forecast potential income.
There are two main types of rental yield: Gross Rental Yield and Net Rental Yield.
Gross Rental Yield: This is the simpler calculation, showing the return before deducting any expenses. It gives you a quick snapshot of the property's income-generating potential.
Net Rental Yield: This is a more realistic measure as it accounts for the various expenses associated with owning and managing a rental property. This includes things like property management fees, maintenance costs, insurance, and council rates. A higher net rental yield generally indicates a more profitable investment.
function calculateRentalYield() {
var propertyValueInput = document.getElementById("propertyValue");
var annualRentInput = document.getElementById("annualRent");
var annualExpensesInput = document.getElementById("annualExpenses");
var resultDiv = document.getElementById("result");
var propertyValue = parseFloat(propertyValueInput.value);
var annualRent = parseFloat(annualRentInput.value);
var annualExpenses = parseFloat(annualExpensesInput.value);
if (isNaN(propertyValue) || propertyValue <= 0) {
resultDiv.innerHTML = "Please enter a valid Property Value.";
return;
}
if (isNaN(annualRent) || annualRent < 0) {
resultDiv.innerHTML = "Please enter a valid Annual Rental Income.";
return;
}
if (isNaN(annualExpenses) || annualExpenses < 0) {
resultDiv.innerHTML = "Please enter a valid Total Annual Expenses.";
return;
}
// Calculate Gross Rental Yield
var grossYield = (annualRent / propertyValue) * 100;
// Calculate Net Rental Yield
var netRent = annualRent – annualExpenses;
var netYield = (netRent / propertyValue) * 100;
resultDiv.innerHTML =
"Gross Rental Yield: " + grossYield.toFixed(2) + "%" +
"Net Rental Yield: " + netYield.toFixed(2) + "%" +
"Note: Annual Expenses are deducted from Annual Rental Income for Net Yield calculation.";
}