Why is calculating rental yield crucial?
Investing in real estate can be an excellent way to generate passive income and build wealth. However, the success of a real estate investment is not measured only by the purchase price or the rent you can get. It is fundamental to perform a thorough yield analysis to ensure the operation is financially viable and meets your expectations.
What factors does our calculator consider?
To offer you a complete view, the tool considers all elements that impact the real return on your investment:
- Acquisition Costs: Includes purchase price, renovation costs, agency commissions, notary and registry fees, and Property Transfer Tax (ITP) according to your region.
- Financing: If you need a mortgage, we consider the percentage financed, the term, and the interest rate to calculate the monthly payment and the equity contributed.
- Annual Income and Expenses: From monthly rental income to recurring expenses like community fees, property tax, insurance (home, life, non-payment) and an estimated percentage for maintenance.
- Taxation: A crucial aspect. The calculator estimates the impact of income tax on rental income, allowing you to select your tax bracket for a more precise yield calculation.
Frequently Asked Questions (FAQ)
Because they are fixed annual expenses that directly reduce your net profit. Ignoring them would give an unrealistic view of your money's performance.
The mortgage allows 'leverage,' meaning investing with the bank's money. This usually drastically increases ROCE (return on your own capital), although it reduces monthly cash flow due to the payment.