QUOTE(BEANCOUNTER @ Jun 24 2015, 12:23 PM)
general rule of thumb is that rental yield is calculated based on current market value only.
those calculate on purchase price is syiok sendiri nia....bcos you forgone the opportunity gain element....like one "guru" used to promote his property.....
yes if calculate rental yield over historical purchase price is only for owner's own analysis and feel good factor.. overall rental yield must be calculated based on the current market value..
generally, prime landed assets have very low yield, due to the fact that they are very secure properties, hence low risk, hence low return. this is the same scenario for prime commercial shop lots, a lot of them are getting only 3 - 4% yield.
the upside for a low rental yield is that you can either "grow" your rental to achieve a target yield, or there's upside to capital gain / appreciation. therefore a lot of investors relate low yield asset with high capital gain, and vice versa.
another way to look at this is to use this so called yield play to identify below market value properties, for example, a condo in Mont Kiara is achieving a rental yield of 6.5%, but i know that specific area should only command a yield of 5%, therefore it's a good buy because there's potential for capital growth to reflect back the yield to 5%.
yield = rental / market value
always remember to deduct expenses to calculate net yield. no point looking at gross yields (except for quick comparisons).