Rental yield is the difference between what you pay for a property and what you actually get back after a month’s rent has been paid. It differs from property rental income because this measure takes into account only the amount you pay for the property, and not the amount you earn from it. Comparing property rental yields is important if you are planning to invest your money on a property to rent out. The more you pay for it, the less you will get in return.
Comparing property rental yields requires you to understand how the market works. One of the first things you have to do is gather rents of similar properties in different locations. For instance, if you plan to invest in a house in Hong Kong, you will not be able to rent it to people residing in LA. But by going to other cities in the US, such as Dallas or Atlanta, you will be able to get an idea on how much property will cost you. In doing this, you will have a general idea of how much houses in different locations should sell for in the next few months.
After gathering rents of comparable properties, your next task is to analyze the profit and loss account. Comparing property rental yields should be based on an income ratio. Basically, this ratio is the percentage of income that you will earn from renting the property against the amount you have to pay to the tenant. This is very useful, especially if you intend to rent the property out at a profit. By calculating this, you can see if the rental income is higher or lower than the amount you need to pay as tenant. This will give you a clear picture of how much you should charge to your tenants.
When you compare property rental yields, you also need to compare the vacancy rate of different places. Usually, most landlords do not keep their properties fully furnished all the time. This means that there are usually vacant apartments. By examining vacancy rates, you will be able to determine which places have high vacancies and which ones do not.
You may also compare property rental prices according to size of the property. If you have a small property, it may not be practical to let it for rent. Conversely, you may consider renting a large property if you have a big project at hand. It is important to compare property rental prices according to size to determine whether you can make good use of your investment.
After comparing property rental prices, it is necessary to consider the mode of payment that the tenant will prefer. If you choose to let the property fully furnished, then you must calculate how much it will cost you to let the property furnished all the time. On the other hand, if you prefer to charge your tenant rent, you may want to calculate how much you will spend maintaining the property. You have to remember that you have to cover the expenses for repair, maintenance, and all other things related with the property.
Lastly, when you compare property rental yields, it is important to know about any special discounts that you can apply to the tenant. Most properties offer some type of discounts to tenants who maintain the property for a certain period of time. Some properties allow the tenant to rent the property without having to pay for the property insurance. Before you apply for any discounts that a tenant may be eligible for, you should find out if there are any special discounts that a tenant is qualified for based on their lease contract. This will help you determine whether you will be eligible for any such discounts.
You should always try to find out as much as possible about the process of renting a property before you actually decide to let a property for rent. In addition to this, when you compare property rental yields, it is also important to compare various rates from different tenants. For example, you may be able to get a cheaper rate if you choose to rent your property to college students. If you are a landlord, you should be able to use rental price comparisons to get an idea of what you should charge for a particular property. By comparing property rental yields, you will be able to assess which properties are the best for rent based on several factors.