The Property Podcast TPP020: Yields Explained, Rants and a new intro
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Aug 1, 2013 Dive into the world of property with a breakdown of essential calculations like gross yield, net yield, and ROI. Discover why these figures matter in real estate investing, backed by clear examples. The hosts share thoughts on recent debates about home ownership and first-time buyers. Don't miss their tips on balancing numbers with real-world considerations, plus a handy tool for assessing affordability. Get insights into upcoming events and listener shoutouts for a sense of community.
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Gross Yield Is A Shallow Metric
- Gross yield is a simple headline percentage calculated from annual rent divided by purchase price.
- It often misleads because it ignores costs and can make investments look better than they are.
Always Use Net Yield For Real Income
- Calculate net yield by deducting realistic costs from rent before dividing by purchase price.
- Use net yield to compare similar properties because it reflects true recurring income after expenses.
House Vs Flat Shows Hidden Costs
- Rob Bence contrasts a £100,000 house and flat with identical rent to show service charges affect net yield.
- The flat's service charge reduces net income, so identical gross yields can hide different realities.