Despite the successive crises, I note that the real estate market is in perpetual growth. It is for this reason that many investors buy buildings with the intention of renting them. This option is increasingly popular because it offers several advantages such as income stability.
However, before carrying out this type of project, it is better to calculate the rental profitability. The latter designates a value that allows you to know the “return on investment”. More specifically, it helps you know the amount of profit on a rental property. I propose a focus on this indicator.
The formula to use remains relatively simple, I assure you that you will not need an advanced skill in economics or mathematics to solve it. First, the rental return is in percentage, the higher it is, the better the investment. Here is the formula:
You can get for example 5% or 7% depending on several parameters. It is not uncommon, for example, for rental profitability to reach 10% in certain districts of Paris.
This figure refers to the percentage of the investment earned each year. It’s quite easy to understand.
According to the formula that I proposed to you a little above, the rental profitability remains quite simple as a whole. However, you should know that there are some parameters to take into account so as not to distort your calculation. If you wish to have the Net RL, it is necessary to add:
These variables must therefore be taken into account in order to determine exactly the rental profitability of a real estate investment. If you have a little trouble understanding, I recommend the good rental yield rate with the offers of the Gridky comparator.
Now that I have given you the rental profitability formula, you can easily calculate the benefits of your buildings (for rent). However, to guarantee a good performance, there are some criteria to take into account:
From now on, you can therefore know approximately the rental yield of a building. There is no need to use a design office for this type of calculation.