It’s no secret that rent is a large cost of living and in turn, having a rental property can be a revenue-generating asset. So whether you are a seasoned landlord or just looking to into buying your first rental property, we have a made a simplistic rundown of rental yields, how to calculate it and what all the numbers mean.
What is rental yield?
Starting off with the basics, rental yield is how much money a revenue-generating asset produces each year as a percentage compared to the assets overall worth.
An example is a rental home with an HomesEstimate of $450,000.
Average RentEstimate of $450 per week multiplied by 52 weeks,
Dived the sum by $450,000 as the average estimated value and that sum is the yield.
Gross Yield vs Net Yield
Gross yield is the amount of raw revenue that is generated before any deductions such as income tax, property maintenance, rates, insurance etc.
Net yield is the total you take away after all costs and bills are paid for. The amount of profit you are making from the rental property per year.
Best rental yield locations in New Zealand
For any interested landlords, the Auckland house prices may have hurt your hopes of buying a rental property, but we’ve got some good news.
Whether you consider yourself prospective or a pro, the highest yield areas are in Christchurch. With a 5.3% annual
gross yield on average and a top end of 6.8%. Christchurch is sitting on a 1.7% higher annual gross yield than Auckland.
Christchurch house prices are less than half the price of Auckland with average Christchurch house prices sitting at $452,608.