Many real estate brokers and agents will tell you that a good investment property is the one which offers a high rental return, in the shortest possible time period. rental yield is how much rental income a property produces each year as percentage of that property’s value. Formula is as follows:
Gross Rental Yield = Annual rental income/Property Value
Now, why should you determine the rental yield for a specific property? This is because rental yields help you determine how fast you can recover your investment in that specific property. A higher rental yield means that you can recover your investment in the property faster and generate more profit after it has been paid off.
Gross yields in Miami averaged 11.2%, which is well above the national average of 9.2%3.
there are affordable properties in many locations with notably high rental yields. If you’re wondering as to why they have high rental yield rates, you can take a look at their neighborhoods, the amenities, facilities, or privileges tenants have access at these properties, affordability, unit cuts, and property appreciation rates in their neighborhoods.
Computing rental yield for a specific property and comparing it to your other prospective ones can certainly help you determine which is a good investment. go beyond comparing rental yields if you have two prospective properties (or more). My suggestion is that you run the numbers and determine the implications on investing in a property that’s located in a specific neighborhood, have these numbers, and type of amenities, run the financial and tax implications, including whether you can afford it well after you purchased the property
Higher rental yields mean better investments
If you have rental yield of the property you like you compare don’t look only on the affordability or location as point of comparison go beyond the neighborhood, amenities, safety & security. a more serious investor would want to compare properties by their rental yields to get a better idea of how much time it would take to get the best returns out of their investment.
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