Yield. What's that?!

Yield, quite simply - the cash return you get from leasing your property, expressed as a percentage.

For example:

A property is valued at $500,000

The rent you receive is $500 / week

$500 x 52 weeks = $26,000 per year

divided by the property value $500,000 x 100

= 5.2% yield

Yield is a simple and quick way to start a property analysis. You will often see yield advertised in property adverts, or relating to particular suburbs or property types.

Yield also changes during the property cycle, for example in Sydney presently property values have risen so fast that the yield is relatively low - whereas properties in Brisbane typically offer a better return, or yield, because the price growth has been moderate. This in itself can be a catalyst for the cycle to turn; with investors flocking to suburbs featuring higher yield - which in turn can push up prices & reduce the relative yield for those coming in later.

It isn't the complete picture as it doesn't take into consideration growth history or projections, nor the expenses and risks relating to the property but an experienced investor uses this as a starting point and its an easy place for you to start too.

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Two Red Shoes Copyright © 2020 All rights reserved. Call on 02 9002 0380, 0404 494 929, email us  or 'old school' fax 02 9002 0381

Jarrett Group Pty Ltd atf Jarrett Group Discretionary Trust trading as Two Red Shoes hold Australian Credit Licence No: 428614 and are members of an external dispute resolution scheme. Details of our complaint resolution process can be found here or please see our credit guide. All information contained on this site is general information only, and does not take into account your particular financial situation or needs. You should consider your personal objectives, financial situation along with the recommendations of your trusted advisors.

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