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Gross yield

The gross yield is calculated by dividing the income over a 12 month period by the value (either purchase price or current value) of the property.

So for example if an investor purchased a property for $200000 and it rented for $400 per week the gross yield would be: $20800/$200000 10.4%

Why Calculate Gross Yield

The main reason to calculate gross yield is to allow an apple for apples comparison between two properties in terms of return on investment. It does this by showing the return (rental income divided by the cost of investment (value) in a way that allows a straightforward comparison. A common rule of thumb is that Cash flow Positive|cashflow positive]] properties tend to have roughly a 10% gross yield.

Related Articles

Rental Yield Net Yield Yield on purchase price or current value