The formula to calculate the Lease Yield (Y) is:
\[ Y = \left( \frac{R}{V} \right) \times 100 \]
Where:
Lease yield, also known as rental yield, is a measure of the annual rental income generated by a property as a percentage of its value. It is a key metric used by real estate investors to assess the profitability of a property investment. A higher lease yield indicates a more profitable investment, while a lower lease yield suggests a less profitable one. Lease yield helps investors compare different properties and make informed decisions about where to invest their money.
Let's assume the following values:
Using the formula:
\[ Y = \left( \frac{12,000}{200,000} \right) \times 100 = 6\% \]
The Lease Yield (Y) is 6%.