View Full Version : How to calculate rental yield?
Can anybody enlighten me? Thanks.
Can anybody enlighten me? Thanks.
rental $ * 12 months / condo price
rental $ * 12 months / condo price
Newbie here.
Current market price or previous purchased price?
Example, bought 8 years ago at 600k fully paid and current rental at 3.9k? Need to deduct off property tax and maintenance fee (x12) ?
Newbie here.
Current market price or previous purchased price?
shdnt yield be calculated upon yr own cost? shdnt only potential buyers will use the current market $ to ascertain their potential yield?
Gross yield = rental over a yield divide by current price.
Nett yield = rental over a yield minus all expense then divide by current price.
U take current price of condo because u can sell it and invest to get yield...
There is 1 more-
Nett yield from your outlay = rental per year minus expense minus interest then divide by your outlay...
Depends on what u are calculating.;)
smellyfish
25-11-13, 08:42
more interestingly, try:
take the total net amount earned from rental (minus monthly loan repayment, maintenance, property tax, agent's fee, income tax, everything) divide by your total initial cash contribution (20% + stamp + legal fees etc) towards the purchase
more interestingly, try:
take the total net amount earned from rental (minus monthly loan repayment, maintenance, property tax, agent's fee, income tax, everything) divide by your total initial cash contribution (20% + stamp + legal fees etc) towards the purchase
u still nid to add in interest income forgo for yr savings tat u hv used to pay yr ppty.
stamp duty & legal fees shd be amortised over the useful life of how long the unit will be tenanted.
thomastansb
25-11-13, 09:08
Easiest way is to take rental x 12 / purchase price (your purchase price).
If it works out to be > 6%, what are you waiting for :cheers3:
Can anybody enlighten me? Thanks.
best best best way dont calculate just enjoy whatever u earn...go holiday buy nice car:spliff::spliff::spliff:...thats the power of "OPiuM"...Other peoples Money;););)
more interestingly, try:
take the total net amount earned from rental (minus monthly loan repayment, maintenance, property tax, agent's fee, income tax, everything) divide by your total initial cash contribution (20% + stamp + legal fees etc) towards the purchase
That's ROE.
Easiest way is to take rental x 12 / purchase price (your purchase price).
If it works out to be > 6%, what are you waiting for :cheers3:
Maybe need to deduct maintenance fees from the rental income, then x 12 / purchase price.
Easiest way is to take rental x 12 / purchase price (your purchase price).
If it works out to be > 6%, what are you waiting for :cheers3:
Agreed:cheers3:
As Bro Chestnut shared, it depends on what you want to calculate.
This method gives me an indication whether it is a sound investment :)
Gross rental/ the amount of deposit u put to pay property
gross yield / price is the worse possible calculation that is touted by ppty agents. some times the net yield might become negative even with a decent gross yield.
more interestingly, try:
take the total net amount earned from rental (minus monthly loan repayment, maintenance, property tax, agent's fee, income tax, everything) divide by your total initial cash contribution (20% + stamp + legal fees etc) towards the purchase
This is a more appropriate way except that it should be just minus off the monthly interest rather than monthly repayment.
dont waste time calculating rental yield based on historical purchase price.
thomastansb
27-11-13, 13:22
So what price do you think we should based on?
dont waste time calculating rental yield based on historical purchase price.
dont waste time calculating rental yield based on historical purchase price.
r u trying to tell me tat yr conservative 4-5% rental yield for JG is based on the current price when JG top?
Also don't be too fixated by the magic no of 3,4 or 5% rental yield. You have to look at the gross amount you are getting also.
For eg, S$2.5k HDB rental is peanuts, though yield may be super gd.
Prospective Buyer will be looking at [(Monthly rental x 12) less annual expenses] divided by offer price of seller. Existing owner will be be looking at [Monthly rental x 12) less annual expenses) divided by purchase price. There is no right or wrong way as long as it makes you feel happier. :D
dont waste time calculating rental yield based on historical purchase price.
If you want to talk about historical purchase price, then someone will say 15%, 10% and others will say 3% all from the same development.
Is that even meaningful to discuss at all?
What do you think they used to calculate rental yield?
https://www.squarefoot.com.sg/market-watch/rental-yield
proud owner
28-11-13, 01:31
If you want to talk about historical purchase price, then someone will say 15%, 10% and others will say 3% all from the same development.
Is that even meaningful to discuss at all?
What do you think they used to calculate rental yield?
https://www.squarefoot.com.sg/market-watch/rental-yield
hhhhmmmmm
you have a point ...
I bought my house in 2006 at 1 mio and have been renting out at 10k a mth since then ...
wow 12 pct yield ?
but if I use latest valuation ... its a lot lesser ....
you have to use present day value becoz you have to assess between keeping the house and the yield thereafter, or sell at market price and use the money for alternative investment to give you same (or higher) returns.
hhhhmmmmm
you have a point ...
I bought my house in 2006 at 1 mio and have been renting out at 10k a mth since then ...
wow 12 pct yield ?
but if I use latest valuation ... its a lot lesser ....
What if someone who bought the HDB 30 years ago at $35,000 and currently renting out at $2500 per month?
85% rental yield? :D
thomastansb
28-11-13, 11:35
Yup. The owner is getting 85% rental yield.
What if someone who bought the HDB 30 years ago at $35,000 and currently renting out at $2500 per month?
85% rental yield? :D
Yup. The owner is getting 85% rental yield.
perhaps he could rent it out for $500 per month and still think he is the smartest investor in singapore because of high rental yield
auroraborealis
28-11-13, 12:58
the beauty of it is that he has this option & not scare even if rental mkt soften. this is the beauty of buying early...
even for ppl who bot at 96/97 peak; even if not much capital gain at current valuation for some old condos... their loan has been paid down by so much by today; they can afford to be very competitive in pricing their rental units
perhaps he could rent it out for $500 per month and still think he is the smartest investor in singapore because of high rental yield
the beauty of it is that he has this option & not scare even if rental mkt soften. this is the beauty of buying early...
even for ppl who bot at 96/97 peak; even if not much capital gain at current valuation for some old condos... their loan has been paid down by so much by today; they can afford to be very competitive in pricing their rental units
I think the thread is about calculating rental yield, not about how much one leverage or risk exposure.
thomastansb
28-11-13, 21:14
Don't exactly see your point here.
If I work for 20 years and earn $15,000 a month now, should I take fresh grad salary and say I earn $2,500?
perhaps he could rent it out for $500 per month and still think he is the smartest investor in singapore because of high rental yield
Don't exactly see your point here.
If I work for 20 years and earn $15,000 a month now, should I take fresh grad salary and say I earn $2,500?
This is getting very complex and I certainly have no clue how you could related a person who have work for 20 years and a $15,000 salary to do with a fresh grad?
Why not compare to a infant sucking milk from his mother' breast? :D
thomastansb
28-11-13, 23:15
Precisely. I think you just slap yourself. Good. If I buy my flat at 50k and I rent out 2k a month, I am getting 48% rental yield. What has my neighbour's purchase price got to do with my yield? I am getting 48% regardless of breast milk or cow milk.
This is getting very complex and I certainly have no clue how you could related a person who have work for 20 years and a $15,000 salary to do with a fresh grad?
Why not compare to a infant sucking milk from his mother' breast? :D
Precisely. I think you just slap yourself. Good. If I buy my flat at 50k and I rent out 2k a month, I am getting 48% rental yield. What has my neighbour's purchase price got to do with my yield? I am getting 48% regardless of breast milk or cow milk.
find me a $50k flat that you can buy now and rent out for $2k then we talk. 48% rental yield?
All these fairytale and nonsensical example are just plain childish and stupid, or should I say, self glorifying and mental masturbation.
thomastansb
29-11-13, 09:49
Who is stupid here?
The topic is - how to calculate rental yield? It would be rental x 12 / purchase price. Common sense will tell us it is YOUR purchase price.
If I buy a 1M studio with no view and rent out 3k and my neighbour prefer a bay view unit and buy 2M but rent out 3k also. So my yield is 3k x 12 / 1M or 3k x 12 / 2M?
Looks like common sense is not very common after all :tongue3:
find me a $50k flat that you can buy now and rent out for $2k then we talk. 48% rental yield?
All these fairytale and nonsensical example are just plain childish and stupid, or should I say, self glorifying and mental masturbation.
auroraborealis
29-11-13, 10:46
y bother calculating yield if don't intend to take into account leverage; who pays 100% purchase price in cash?
bank earns a fixed yield on housing loans; owners as "equity holders" enjoy the balance... as owners pay down their principal portion of the housing loan, their "equity stake" in the property rises but interest cost reduces
I think the thread is about calculating rental yield, not about how much one leverage or risk exposure.
R33
the one who bought much earlier and enjoy high yield now (even though renting at below market rate) is ALWAYS smarter (u can say luckier if u dont agree) then the one who bot at market peak.
R33
the one who bought much earlier and enjoy high yield now (even though renting at below market rate) is ALWAYS smarter (u can say luckier if u dont agree) then the one who bot at market peak.
totally agree.
so the moral behind the story is, in the future b4 one invest, make sure there r empty plots of INFERIOR lands near yrs reserved for resi purposes :47:
liddat will sure huat big big :cheers5:
Who is stupid here?
The topic is - how to calculate rental yield? It would be rental x 12 / purchase price. Common sense will tell us it is YOUR purchase price.
If I buy a 1M studio with no view and rent out 3k and my neighbour prefer a bay view unit and buy 2M but rent out 3k also. So my yield is 3k x 12 / 1M or 3k x 12 / 2M?
Looks like common sense is not very common after all :tongue3:
When someone wishes to self glorify or mental masturbate, their objective is only to make themselves feels good regardless of facts or circumstances. Hence its not surprising that they say they can generate 48% rental yield from their property investment.
But for real investors, be it property or stocks etc, no one will use historical purchase price to measure their investment returns because its is stupid and meaningless. Its like running a 100m race as an adult and then comparing the timing to what you have achieved when you are in primary school.
So if you are renting out @ $2500 per month and you call it 48% yield, while your neighbor who have identical unit is renting it out at $3000 per month and call it 6% return based on current valuation.
Who do you think is making their investment asset working harder?
Having said that, have you find out which $50k flat the you can buy NOW and can rent it out for $2500 per month?
R33
the one who bought much earlier and enjoy high yield now (even though renting at below market rate) is ALWAYS smarter (u can say luckier if u dont agree) then the one who bot at market peak.
So if you are renting out @ $2500 per month and you call it 48% yield, while your neighbor who have identical unit is renting it out at $3000 per month and call it 6% return based on current valuation.
Who do you think is making their investment asset working harder?
So if you are renting out @ $2500 per month and you call it 48% yield, while your neighbor who have identical unit is renting it out at $3000 per month and call it 6% return based on current valuation.
Who do you think is making their investment asset working harder?
KAM GONG!
firstly, you got the concept of yield calculation wrong. Period
secondly, you are deflecting your glaring mistake by embarking on an entirely different topic
thirdly, just to humor you. if my neighbour is fetching $3000 in rent, what makes you think that i can raise my rent to be equal?
lastly, my oh my - stupid is as stupid does
y bother calculating yield if don't intend to take into account leverage; who pays 100% purchase price in cash?
bank earns a fixed yield on housing loans; owners as "equity holders" enjoy the balance... as owners pay down their principal portion of the housing loan, their "equity stake" in the property rises but interest cost reduces
In the financial world, there is something call Return on Equity and it is used to measure how hard your money is working for you.
e.g a property that is worth $1m and generating $36k of rental a year.
For someone who take maximum loan of say 80%, their equity will be $200K, while someone who fully pay up their property, their equity will be $1m.
So in terms of ROE, the one who take 80% loan will have a ROE of 36/200 = 18%, while the one who pay the property in cash will have a ROE of 36/1000 = 3.6%.
And of course you are going to argue that the one who take loan will have to pay interest. So based on $800k loan @1.5%, interest per year will be around $12k, so after deducting interest, the ROE will be (36-12)/200
= 12%, and with that you also can use interest payment as deductible for taxes.
So now you tell me, which investor is smarter?
KAM GONG!
firstly, you got the concept of yield calculation wrong. Period
secondly, you are deflecting your glaring mistake by embarking on an entirely different topic
thirdly, just to humor you. if my neighbour is fetching $3000 in rent, what makes you think that i can raise my rent to be equal?
lastly, my oh my - stupid is as stupid does
there is nothing here that is worth commenting.
Please read my signature please
thomastansb
29-11-13, 13:01
Yes, my yield is 48% and my neighbour yield is 6%.
This is not about self satisfying. This is about finance, this is about calculation. There is only 1 right answer.
You are saying you can't get a 50k flat that rent out 2k. Because you have to buy it 30 years ago. That is if you are looking as a potential investor. That flat is probably 500k and can rent out 2k which give you 4.8%. So to a potential investor, if he buys the 500k property and rent out 2k, he gets 4.8%. But that doesn't change my yield because I bought it at 50k and rent out 2k. This is not about see my yield at 48% and I feel shiok. It is about me putting 50k and getting 24k returns a year. Simple maths.
Whether you can find a flat at 50k is irrelevant. Stick to the topic. The topic is about - how to calculate rental yield. My answer is YOUR rental x 12 / YOUR purchase price. Your neighbour rental or purchase price is useless data.
When someone wishes to self glorify or mental masturbate, their objective is only to make themselves feels good regardless of facts or circumstances. Hence its not surprising that they say they can generate 48% rental yield from their property investment.
But for real investors, be it property or stocks etc, no one will use historical purchase price to measure their investment returns because its is stupid and meaningless. Its like running a 100m race as an adult and then comparing the timing to what you have achieved when you are in primary school.
So if you are renting out @ $2500 per month and you call it 48% yield, while your neighbor who have identical unit is renting it out at $3000 per month and call it 6% return based on current valuation.
Who do you think is making their investment asset working harder?
Having said that, have you find out which $50k flat the you can buy NOW and can rent it out for $2500 per month?
thomastansb
29-11-13, 13:04
You can tell who is smarter by looking at yields? What about capital appreciation?
In the financial world, there is something call Return on Equity and it is used to measure how hard your money is working for you.
e.g a property that is worth $1m and generating $36k of rental a year.
For someone who take maximum loan of say 80%, their equity will be $200K, while someone who fully pay up their property, their equity will be $1m.
So in terms of ROE, the one who take 80% loan will have a ROE of 36/200 = 18%, while the one who pay the property in cash will have a ROE of 36/1000 = 3.6%.
And of course you are going to argue that the one who take loan will have to pay interest. So based on $800k loan @1.5%, interest per year will be around $12k, so after deducting interest, the ROE will be (36-12)/200
= 12%, and with that you also can use interest payment as deductible for taxes.
So now you tell me, which investor is smarter?
there is nothing here that is worth commenting.
Please read my signature please
nothing worth commenting? why? cos i hit all your soft spots at once?
kam gong! WAAHAHAHAAHAHAHAHA
nothing worth commenting? why? cos i hit all your soft spots at once?
kam gong! WAAHAHAHAAHAHAHAHA
Again, there is nothing..
You can tell who is smarter by looking at yields? What about capital appreciation?
We are talking about rental yield NOT capital appreciation so please stop talking about 48% rental yield .nonsense.
proud owner
30-11-13, 00:06
I think someone said it correctly ... in page 1
If you are the owner of a rented out unit ...
take the rent x 12/ your purchase price ...
if you had bought it cheap LONG ago ... your rental yield is very high
if you have JUST bought it ( at market rate) your rental yield is much lower ...
so for a particular unit that is for sale with tenancy ( or current rental rate in the area)
take the rent X 12 / selling price ...
to the seller ( who bought cheap long ago ) the yield is very high..
to the buyer ( who is buying ) the yield can be super low ...
I think someone said it correctly ... in page 1
If you are the owner of a rented out unit ...
take the rent x 12/ your purchase price ...
if you had bought it cheap LONG ago ... your rental yield is very high
if you have JUST bought it ( at market rate) your rental yield is much lower ...
so for a particular unit that is for sale with tenancy ( or current rental rate in the area)
take the rent X 12 / selling price ...
to the seller ( who bought cheap long ago ) the yield is very high..
to the buyer ( who is buying ) the yield can be super low ...
there is only one rental yield that is worth discussing, ie. current rent / current value. Anything else is just good for mental stimulation.
thomastansb
30-11-13, 00:51
Stupid :doh:
We are talking about rental yield NOT capital appreciation so please stop talking about 48% rental yield .nonsense.
Stupid :doh:
48% rental yield. yeah, that's just genius. I dont think Monopoly can even give that kind of yield.
perhaps you should just stick to the board game instead of wasting time here.
thomastansb
30-11-13, 01:33
That is why I say you stupid.
48% rental yield. yeah, that's just genius. I dont think Monopoly can even give that kind of yield.
perhaps you should just stick to the board game instead of wasting time here.
That is why I say you stupid.
some people like mental masturbation while others dont. thats the difference.
And yes, the entire world is stupid because no one talk about 48% rental yield except you.
Continue with your mental masturbation while you still can.
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