Calculate the return
To get an idea of the rental yield, you need to calculate the annual yield as follows: (annual rent / total costs) x 100. The result will give you a percentage figure that shows what percentage of your invested money you can expect to get back in one year.
What are the risks involved in calculating rental yield?
Renting out a property carries with it a certain amount of risk and uncertainty. For example, there may be periods when the property is not rented out, or unexpected repairs may occur that will increase your costs. It is important to consider these factors and have a financial buffer for any potential costs.
Professional management option
If you do not want to worry about dealing with the problems associated with renting, you may want to consider professional property management. This service will take the hassle out of finding tenants, dealing with contracts, and resolving unexpected situations that may arise. With this service, you will reduce worry, save time, and ensure the maintenance of the property continues to a suitable standard.
Thorough tenant agreements
Having a professional tenant agreement is key to reducing risk and hassle. The contract should clearly set out all the terms and conditions for both parties. This includes the length of the lease, the rent amount, rules for maintaining the property and any other information you deem important.
Consider long-term vs. short-term lease
You can also decide between a long-term and a short-term lease. A long-term rental provides a steady income, but it can be more challenging to find a long-term tenant. On the other hand, short-term rentals (for example, through Airbnb) can be more profitable, but require regular property management and maintenance.