The gap between the costs and the income from renting property is usually known as rental yield. When you are investing in a property, it is important to achieve a good return. If the income falls under your expenditure, you will lose money. So, you just need to identify the break-even point. In this situation, rental yield can be a great solution. It is a good way to measure a property’s potential rental return.

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A good rental yield must have enough cash flow to cover running costs. While investing in a property, be careful to choose one that ensures a positive return. Sometimes market value properties seem more tempting to investors. But you need to remember that a property with less rental demand will provide you with less capital growth in the long run.

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Rental yield is an effective way to measure the difference between income and expenditure of your investment property. A sustainable rental income is very important to cover the running cost of a rental unit. A mortgage payment is not the only cost, you have to bear after purchasing a property. Rather there are many unforeseen as well expensive costs, you need to bear after the investment. So, it is important to have sufficient cash flow from your rental property.

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The rental return needs to cover all the costs including management fees, buy-to-let landlord insurance costs. All of these costs are variable and you just need to keep them in mind while calculating rental returns.