Explanation:
Annual Rental Income: This is the total rental income you expect to receive from the property in a year. You can calculate this by multiplying the monthly rent by 12.
Example: If your monthly rent is S$5,000, your annual rental income would be S$5,000 x 12 months = S$60,000.
Property Value: This is the current market value of the property you're considering or that you already own.
Example:
Let's say you're considering an investment property with a market value of S$1,000,000 and you expect to rent it out for S$5,000 per month.
Rental Yield Calculation:
Annual Rental Income = S$5,000/month x 12 months = S$60,000
Property Value = S$1,000,000
Rental Yield = (S$60,000 / S$1,000,000) x 100% = 6%
Interpretation:
In this example, the rental yield is 6%. This means that you can expect a 6% return on your investment each year from the rental income.
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