Property Yield Explained!

A property yield is an important metric used to evaluate the return on investment from a commercial property. It is calculated as the net income generated from a property after deducting all expenses, divided by the property's purchase price or cost. Yield is typically expressed as a percentage and is used to compare the performance of different commercial properties.

Rental escalation is another factor that affects a property's yield. As rental income increases over time, so does the yield. This is why it's important to consider rental escalation when evaluating the potential yield and return of a commercial property investment.

The calculation of property yield is straightforward and can be done using the following formula:

Yield = (Nett Income / Property Cost) x 100

Nett Income is defined as the total rental income received from the property, minus any expenses such as property management fees, insurance, maintenance costs, and taxes.

When considering a commercial property investment, it is important to remember that yield is just one of many factors that must be taken into account. Other factors such as property location, demand for rental space, and market conditions must also be considered in order to make an informed investment decision.

By working with a qualified commercial property specialist at Fundation Property, you can ensure that you have a full understanding of the potential yield of a property, and that you are able to make an informed and positive investment decision.