This is dependent on the purchase price, area, your aversion to risk, and also your future intentions with the property.
- You could be a professional landlord who is building a large portfolio, and yield is your main driver.
- You’re retired and intend to downsize your family home in a few years, and buy a high end property in the West End of Glasgow, renting it out in the interim.
Generally, rental yields can vary from roughly 5% to 10%, depending on the above.
Agents often sell a property based on gross rental yield, but how do you work this out?
Monthly rent multiplied by 12 Months (£1500 x 12) = £18,000
Divide Annual Rental income by Purchase Price (£18,000/£300,000) = 6%