Tuesday, February 19, 2008
About this Blog
Rental yield in %=
(Net Annual Rent Collected / Total Cost of Property) x 100 %
(Net Annual Rent Collected = Total Rent Collected - maintainence cost, property tax, property agent cost, income tax, vacant cost etc)
( Total Cost of Property = Price of Property + Stamp Duty + Legal fees + Renovation + furnishing)
Example (assuming no mortgage):
If you bought a property for $600,000 (inclusive of all costs), you rent it for $2000/month and your monthly maintainence is $200, agent fee is 1 month's rent, amortised furnishing cost is $500/year (i.e. you spend $5k on furnishing and expect it to last for 10 Years so amortised cost = $5000/10 years), property tax (10% of annual value) is $2400, and assuming other costs to be negligible, we have:
Net Annual Rent Collected in $ = $2000x12 - ($200x12 + $2000 + $500 +$2400) = $16,700
Rental Yield = ($16,700/$600,000) x 100 = 2.78% ~ 3%
If the mortgage rate is 3%, then rental yield will just be about enough to pay for your mortgage interest (only).
May also want to read:
How to Calculate Property Tax for Singapore Property
Singapore Property History
How to calculate Stamp Duty for Singapore Property
How to Calculate Rental Yield
The following formula shows how to calculate rental yield accurately by taking into all costs that are often overlooked:Rental yield in %=
(Net Annual Rent Collected / Total Cost of Property) x 100 %
(Net Annual Rent Collected = Total Rent Collected - maintainence cost, property tax, property agent cost, income tax, vacant cost etc)
( Total Cost of Property = Price of Property + Stamp Duty + Legal fees + Renovation + furnishing)
Example (assuming no mortgage):
If you bought a property for $600,000 (inclusive of all costs), you rent it for $2000/month and your monthly maintainence is $200, agent fee is 1 month's rent, amortised furnishing cost is $500/year (i.e. you spend $5k on furnishing and expect it to last for 10 Years so amortised cost = $5000/10 years), property tax (10% of annual value) is $2400, and assuming other costs to be negligible, we have:
Net Annual Rent Collected in $ = $2000x12 - ($200x12 + $2000 + $500 +$2400) = $16,700
Rental Yield = ($16,700/$600,000) x 100 = 2.78% ~ 3%
If the mortgage rate is 3%, then rental yield will just be about enough to pay for your mortgage interest (only).
May also want to read:
How to Calculate Property Tax for Singapore Property
Singapore Property History
How to calculate Stamp Duty for Singapore Property
Friday, February 15, 2008
About this Blog
By: Anonymous
Posted: 14-2-2008
So as to bring you up to speed on what's happening in the real world ........ and its possible effect on us , ..the following that is happening may affect the financial health of the banking systems in the US (but like the proverbial frog in the well, all is still blue skies to you).
They are now talking of SOLVENCY, not just LIQUIDITY issue .......it's really quite serious now.
This is not meant to frighten but be a voice of caution ........ so as to mitigate potential losses!
SOLVENCY WORRIES STALK CREDIT-DERIVATIVES MARKET
Gross applied the historical average default rate of 1.25 percent to the $45.5 trillion of notional swaps and assumed a 50 percent recovery rate for holders of the defaulted debt. Under that all-too-plausible scenario, Gross calculated that the default-swap market has the potential to generate losses of $250 billion in coming years.
http://www.bloomberg.com/apps/news?pid=20601039&sid=adyEbUU8AE2M&refer=columnist_gilbert
Smart Buyers Collection: SOLVENCY WORRIES STALK CREDIT-DERIVATIVES MARKET
Smart Buyers Collection is a collection of words of wisdom by various Singapore property watchers.By: Anonymous
Posted: 14-2-2008
So as to bring you up to speed on what's happening in the real world ........ and its possible effect on us , ..the following that is happening may affect the financial health of the banking systems in the US (but like the proverbial frog in the well, all is still blue skies to you).
They are now talking of SOLVENCY, not just LIQUIDITY issue .......it's really quite serious now.
This is not meant to frighten but be a voice of caution ........ so as to mitigate potential losses!
SOLVENCY WORRIES STALK CREDIT-DERIVATIVES MARKET
Gross applied the historical average default rate of 1.25 percent to the $45.5 trillion of notional swaps and assumed a 50 percent recovery rate for holders of the defaulted debt. Under that all-too-plausible scenario, Gross calculated that the default-swap market has the potential to generate losses of $250 billion in coming years.
http://www.bloomberg.com/apps/news?pid=20601039&sid=adyEbUU8AE2M&refer=columnist_gilbert
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