How do you calculate rental yield?

To calculate the rental yield of a property in Singapore, you can use two main methods: the Gross Rental Yield and the Net Rental Yield.

Gross Rental Yield

This method involves dividing the annual rental income by the property's current market value or purchase price.

- Annual Rental Income: This is the total rent collected from the property over a year.
- Property Value: This can be either the current market value or the purchase price of the property.

For example, if a property generates $25,000 in annual rental income and has a current market value of $400,000, the gross rental yield would be:
[ \text{Gross Rental Yield} = \frac{\text{Annual Rental Income}}{\text{Property Value}} = \frac{25,000}{400,000} = 6.25% ]

Net Rental Yield

This method takes into account the operating expenses associated with maintaining the property.

- Annual Rental Income: The total rent collected from the property over a year.
- Operating Expenses: These include costs such as property management fees, repairs, and vacancies.
- Property Value: The current market value or purchase price of the property.

For instance, if a property generates $240,000 in annual rental income, has operating expenses of $60,000, and a property value of $4 million, the net rental yield would be:
[ \text{Net Rental Income} = \text{Annual Rental Income} - \text{Operating Expenses} = 240,000 - 60,000 = 180,000 ]
[ \text{Net Rental Yield} = \frac{\text{Net Rental Income}}{\text{Property Value}} = \frac{180,000}{4,000,000} = 4.5% ]

Using EdgeProp Singapore's tools, you can easily filter properties based on their rental yields and access detailed data on past transactions, price trends, and other relevant metrics to make informed property investment decisions.