How do you compute rental yield

Rental yield is calculated as a percentage by dividing the annual rental income by the property's purchase price and multiplying the result by 100. For Singapore properties, the basic formula is: Rental Yield (%) = (Annual Rental Income / Property Purchase Price) x 100.

This figure provides an indication of how much income a property generates relative to its cost, without factoring in additional costs such as maintenance, property tax, agent fees, or loan interest.

If you want a more accurate measure, you can calculate net rental yield by subtracting all property-related expenses (such as maintenance fees, property tax, insurance, and any period when the property is vacant) from your annual rental income before dividing by the purchase price and multiplying by 100. Net Rental Yield (%) = [(Annual Rental Income – Annual Expenses) / Property Purchase Price] x 100.

These calculations are widely used in Singapore to compare the investment potential of different properties.