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The Property Clock – Yield
Calculating Yield
So how does a professional investor know that a property purchase is going to put money in his pocket? Well its called yield. Yield is defined as:
‘what you get out relative to what you put in’
What You Get Out
So what do you get out from property? – RENT! But its not just as simple as that. You have to consider the expected rent to be received and expected costs. But does the professional investor include capital growth? – NO! This is because it is unknown even though the professional investor may have an inkling. By using examples, this chapter assess what you should get out depending on what you put in. At the end of the chapter, you will have a clearer idea of where you stand; should be able to decide which one of the three types of investors you are and then decide which yield calculation is applicable to you Understanding Positive and Negative Yield
Again, using examples, you’ll be able to understand yield calculations from multiple viewpoints and appreciate that things may not always be as they appear.
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