In most areas of commercial surveying, you will come across yields. There are various different types of Yield. The yield you need to use will always be relevant to the type of valuation you need.
What is a Yield?
The Yield refers to the return on an investment over a period of time and is expressed in terms of percentage based on the invested amount or on the current market value.
Initial Yield
Yield = Rent Passing / Current Price
The annual rent as a percentage of the purchase price – Gross as this doesn’t include costs
Equated Yield
Takes into account IRR and Growth Explicit
All Risks Yield
Reflects all risks and benefits to the investor
Reversionary Yield
Yield = Market Rent/ Current Price
Anticipated yield once the rent reaches the ERV
Running Yield
At one point in time
Knowing these definitions is pretty essential. They have quite similar names too, so this is an easy one to get caught out on
Furthermore, once you have grasped the different yields available.
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