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How to Calculate Net Rental Yield for the Real Estate Investor - W/Spreadsheets

Learn how here, and get a spreadsheet for future fast calculations.

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The beginning of a successful rental property investment strategy is an accurate estimate of rental yield for the prospective property. Here we see how to calculate Net Rental Yield, which takes the property expenses into account, though not the mortgage payments. Then we look at the same property with the mortgage included, and using the actual cash invested. This gives us a cash-on-cash rental yield.

At the end of this example is a link to two spreadsheets, one a sample and the other a blank one ready to calculate the net rental yield and cash-on-cash rental yield from your inputs.

Net Rental Yield:

Monthly Rental Amount $2,400.00
Percent of Year UnOccupied 5%
Take out for Vacancy for Annual Cash In of $27,360.00

Annual Insurance Cost $1,200.00
Annual Taxes $1,400.00
Annual Repairs Budget $600.00
Percent of Rent Mgmt Fee of 6%
These expenses total to Annual Cash Out of $4842

Income of $27,360 minus cost of $4842 = $22,518 rental income after expenses

Property Acquisition Cost $300,000.00

$22,518 divided by property value of $300,000 = Rental Yield of 7.5%

Cash-on-cash Rental Yield:

Monthly Rental Amount $2,400.00
Percent of Year UnOccupied 5%
Take out for Vacancy for Annual Cash In of $27,360.00

Property Acquisition Cost $300,000.00
Less Down Payment - Cash In $60,000.00
Amount of the loan $240,000.00

Payment Monthly Pricipal/Interest $1,556.64
Annual Insurance Cost $1,200.00
Annual Taxes $1,400.00
Annual Repairs Budget $600.00
Percent of Rent Mgmt Fee of 6%
These expenses total to Annual Cash Out of $23,521.28

Income of $27,360 minus cost of $23,521 = $3839 cash return over cash out

$3839 divided by cash investment of $60,000 = Cash-on-cash Rental Yield of 6.4%

Get the spreadsheets at the links below.

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