This is how the calculation of your rental income as a landlord
The rental yield, also known as the return on capital, is a more decisive Indicator for the Profitability of a property investment. It indicates what percentage of the capital invested are generated annually through rental income. The calculation of the rental yield is relatively simple, but there are some factors that need to be taken into account to get an accurate result.
To calculate the rental yield, you must first determine the annual rental income. To do this, multiply the monthly basic rent by 12. The basic rent is the basic rent without Service charges such as heating costs, water, sewage or electricity. Next, you must enter the Determine the purchase costs of the property. The purchase costs include the purchase price, the Land transfer tax, notary fees, estate agent fees and financing costs. The Financing costs include interest, amortisation and the bank's fees.
The rental yield is calculated by dividing the annual rental income by the purchase costs. must be divided. The result is multiplied by 100 to obtain the percentage.
Here is an example calculation:
- Monthly basic rent: €1,000
- Annual rental income: €1,000 * 12 = €12,000
- Purchase price: €200,000
- Real estate transfer tax: €3,500
- Notary fees: €2,000
- Brokerage fees: €3,000
- Financing costs (annual): 10.000€
- Total purchase costs: €200,000 + €3,500 + €2,000 + €3,000 + €10,000€ = 218.500€
- Rental yield: (12,000€ / 218,500€) * 100 = 5.48%
The rental yield of 5.48% in this example means that the property will yield
Rental income totalling 5.48% of the purchase costs was generated. Important here isthat the
rental yield is only a rough indicator of the profitability of a property investment. There are other factors that can influence the yield, such as the ancillary costs, the maintenance costs and the increase in the value of the property.
Ancillary costs
Service charges are costs that are not included in the basic rent, such as heating costs,
Water, sewage and electricity. The ancillary costs can vary greatly from property to property.
vary and should therefore be taken into account when calculating the rental yield.
Maintenance costs
Maintenance costs are costs incurred for the upkeep of the property, such as Repairs, renovations and modernisations. The maintenance costs can also vary from property to property and should therefore be taken into account in the calculation of the rental yield.
Increase in value
In addition to rental income, a property can also generate a return through appreciation in value. realise. The increase in the value of a property can depend on various factors, such as z. e.g. the location, condition and demand.
Other factors that can influence the rental yield
- Location:Properties in popular locations with high demand generally achieve higher prices. rental yields than properties in less sought-after locations.
- Condition: Well-maintained and modernised properties generally achieve higher returns. rental yields than obsolete properties.
- Rental income: The level of rental income directly influences the rental yield. Higher
Rental income leads to a higher rental yield. - Financing costs: Financing costs such as interest, amortisation and fees, can influence the rental yield.
- Taxes: Taxes, such as property tax and income tax, can affect the influence rental yields.
- Inflation: Inflation can influence the rental yield, as the purchasing power of money in the decreases over time.
If you are looking to buy a property, you should seek advice from an experienced
estate agent to find the right property for your needs. He will be happy to create such a spreadsheet for you so that you canhe right object as investment can find.
FAQ on the subject of rental yields:
How do I calculate the rental yield?
The rental yield is calculated by dividing the annual rental income by the total purchase costs. of the property and multiplied by 100. All relevant costs should be taken into account, such as purchase price, land transfer tax, notary fees, estate agent fees and financing costs,
be taken into account.
Is the rental yield a reliable indicator of profitability?
The rental yield provides an initial overview of the profitability of a property investment.
However, other factors such as ancillary costs, maintenance costs and potential The increase in value of the property is taken into account in order to obtain a more comprehensive picture of the actual return on investment.
What influences the rental yield besides costs and income?
In addition to the direct costs and income, the location, the condition of the property, the demand on the market, the level of rental income, financing costs, taxes and the Inflation plays a decisive role in the level of rental yields.
Summary:
This text explains the rental yield as an important indicator of the profitability of a property. property investment. It shows in detail how the rental yield is calculated by analysing all costs and income. In addition, the influencing factors on the rental yield, such as ancillary costs, maintenance costs, value appreciation and other relevant variables such as location, condition of the property and inflation. The text emphasises, that the rental yield is only a rough guide and cannot be used for a comprehensive assessment of the profitability, additional factors should be taken into account. For a well-founded decision When buying a property, advice from an experienced estate agent is recommended.
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