2017-02-21
What is Yield and How to Calculate Yield?
- Advice
Yield is the percentage of profit from investment to the investment value. Additionally, it is the percentage of dividend profits to the stock price.
Do you know how to calculate yield?
If you divide the amount of profit per year by the investment value and subsequently multiply by 100, you will get the yield.
Yield = the amount of profit per year / investment value ×100
(For example, let’s just say that your investment amount is one million yen and the amount of profit is 200,000 yen per year, the yield will then be 20%)
There are two types of yield: gross yield and net yield.
Gross yield
How to calculate gross yield for your rental income
Gross yield (%)= rental income per year / the price of property ×100
If you divide the rental income per year by the price of property and multiply by 100, you will get gross yield. However, it does not include the commission, property tax, city planning tax and the cost of repair.
Net yield
How to calculate net yield for your rental income
Net yield (%) = (rental income per year −sundry expenses) / ( acquisition money + sundry expenses when you purchase your property ) ×100
This is a more realistic figure as it reflects your real returns.
However, do note that it does not include the cost of repair and the ratio of vacancy.
If you have any questions or would like to arrange a viewing, please feel free to contact us!