What does 'Yield' mean when buying a property?
Find out what Yield means when you are buying a property. 'What does Yield mean?' plus over 150 other property related terms and jargon in plain English
YieldThe yield of a property is often used when buy-to-let investors are considering the purchase price of a property versus how much they might be able to rent it out for. They can then decide if they believe their funds may perform better elsewhere, such as in a savings account.
Yield is defined as ([[Rental Income for one year] / [purchase price] * 100.
So if I am looking at a property for sale at £250,000 and similar properties in the area are renting for £1500 per month my calculation would be:
([[1500 * 12] /  * 100 = 7% Yield.
Of course this isn't a realistic figure, you won't get to keep all of that rental income because there will be maintenance on the property and you may have fees such as a service charge from the Managing Agents.
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