YIELDS Flashcards
All risks yields
The remunerative rate of interest used in the valuation of fully let property let at market rent reflecting all the prospects and risks attached to the particular investment
True yield
Assumes rent is paid in advance not in arrears
- Traditional valuation practice assumes rent is paid in arrears)
Nominal yield
Initial yield assuming rent is paid in arrears
Gross yield
The yield not adjusted for purchasers’ cost (such as auction result)
Net yield
The resulting yield adjusted for purchasers costs
Equivalent yield
Average weighted yield when a reversionary property is valued using an initial and reversionary yield
Initial yield
Simple income yield for current income and current price
Reversionary yield
Market rent divided by current price on an investment let at a rent below the market rent
Running yield
The yield at one moment in time
What is a yield?
A measure of investment return, expressed as a percentage of capital invested
What is a Years Purchase? How do you calculate this?
Number of years required for its income to repay its purchase price
‘dividing 100 by the yield’
What risks affect a yield?
1- Prospects of rental and capital growth
2- Quality of location and covenant
3- Use of the property
4- Lease terms
5- Obsolescence - likely future rate?
6- Liquidity - ease of sale
