How do I calculate rentability for a property in Singapore, and how is it different from other metrics

To calculate rentability for a property in Singapore, the most common method is to determine the gross rental yield. This is calculated by dividing the annual rental income by the property's purchase price, then multiplying by 100 to get a percentage. For example, if a property generates $36,000 in annual rent and costs $1,000,000 to purchase, the gross rental yield is 3.6%.

Key steps for calculating rentability:
- Estimate the annual rental income from similar properties in the area by checking market trends or using tools like EdgeProp’s market tracker.
- Use the property’s purchase price or current market value.
- Gross rental yield formula: (Annual Rental Income / Property Price) x 100.

Difference from net rental yield:
Net rental yield considers additional costs such as maintenance fees, property tax, insurance, and management fees, giving a more accurate picture of profitability. Gross yield is simpler and does not account for these overheads.

Rentability may also be influenced by factors like lease tenure (especially for HDB properties), nearby amenities, and historical rental growth trends, all of which can be researched with EdgeProp Singapore’s market analytics and heatmaps.

For a more tailored calculation, EdgeProp Singapore provides analytical tools to track market prices and rental trends, helping investors make informed decisions based on up-to-date data specific to Singapore.