There are two basic types of property yield, because like with any interest rate, a rate is useless unless you specify the interest frequency to which it relates. In the financial world the easiest and most common indiocator is the Annual Effective rate (AER), which assumes interest annually in arrear. Whilst this is the generally useful "standard", for property the Nominal Yield assuming quarterly payments is very common. This is because when you do a quick back-of-the-envelope yield on the passing rent and the valoue, you are implicitly doing a Nominal Yield - because although you didn"t think about it, you assumed payments quarterly. The key thing is to know which type of yield you mean. |