Scenario of Rental Income
Property Price : $1,140,000
Monthly Rental : $3300
Yield at Cost : 3.47 %
Annual Net Income
After considering below
- Condo maintenance cost : 400 monthly
- Rental Agent fee = 0.5 month annual.
Monthly Net income : $3300 - 400 - (0.5 month / 12) = $2763
However, usually people borrow quite an amount to finance the purchase. So there is leverage in play. And this is where Math becomes complex.
3.. How much you leverage
- Stamp Duty & Fees : 2.72% one time
- Interest Cost.
Let's assume item 4 in build into the condo valuation. Basically ignore.
Leverage resulting I need to pay $606 of interests portion monthly
Monthly Net income : $3300 - 400 - (0.5 month / 12) - 606= $2157
Implied, Annual Net Income =
$25, 884
YIELD
Now, let's talk about Yield. Yield at Cost based on net income : 2.3 %. This Math sucks right ?
One thing to note. Property valuation can change with time. If property valuation increase 35% after 10 Years. The capital returns are then plough back into the monthly income in simplify manner....
