How to calculate YIELD vs How to calculate ROI in PROPERTY | Jamie York

So you're getting into property investment. You need to know if a property is a good deal or not so you need to work out know how to calculate yield and how to calculate ROI in property because otherwise, you won't know if the property is a good deal or not.

Do you just work out the yield or just the return on investment because you might need to do both! and in this video I explain the difference and why I like ROCE (Yes another acronym!). Property investing isn't easy and you can easily be burnt if you don't work your yield AND calculate your ROI in property.

Over the past 10 years, I've been investing in property and I wanted to explain to you what I do when I'm calculating property yield and calculating my ROI/ROCE from my property investments. Real estate in the UK is going through an unusual time but the deals are there and I want to help you find the good ones from the bad.

Let me know in the comments what you look for in a property investment.

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[jonathanmulryan]

Very informative, I've re-watched this video 8 times.

[pamshanker]

Great video Jamie. I agree, ROCE is definitely the best way to compare investments.

[petercopeland]

Another great video Jamie! I still speak to investors who base their decision on gross yield but as you say, ROCE is the way to go if you want to compare the investment to another.

[keithstewart]

useful-I am about to refinance and like the roi model.It seems more accurate. thanks.

[harryjackson]

Great video Jamie!
Really appreciate all the value you’re giving! I would definitely agree ROCE for me! 😊👍

[splicketylictv]

Hello, great video! My question is, should I include the equity that is in the house at time of purchase for the ROCE or ROI. For example, if I close a deal on 300k house for 250k, should I include the 50k equity in my ROI calculation?
In my head I figure the amount of equity at time of sale can vary with market conditions in the future so I wouldn't include it since I don't plan to immediately sell the property for the 50k.

[jasonleung]

Jamie, when working on ROI, do you only include your own capital deployed or total cash involved including purchase price, refurb, legal and broken fees and stamp duty

[AndreasP]

Nice and to the point video. I'd always work with ROCE but tend to pretend both. Now if we could only get everyone to calculate it the same way and include the same costs..

[Andromedaxterr]

I would love to see your calculation when it comes to ROI after refurbisment and revaluation please !!!

[debbyshapiro]

Very good delivery. . One thing..plse srick to figures you chose..doesnt have to be realsstic or rounded numbers

[stuartboswell]

Jamie what about the gas and electric in working out the r.o.i.

[NinaNina-jtzp]

haha i was wondering why everyone else wanted the board, I want one tooo

[tentimetex]

Rental yield is quite confusing because some people say taxes are included as a cost and some people say they are not. RY is supposed to be the Net Operating Income, therefor it does not include taxes, isnt that right? and which ones? the property tax or the income tax? or both?

[harryheckels]

Could you do a detailed video about all the costs of a buy to let including one of costs, monthly costs and yearly costs such as getting the gas and water checked it would help a lot:)

[neilwhitehead]

Do you have a useful spreadsheet that we could download, that accounts for all of this and shows your projections - similar to your 'refurb' and property refurbishment check sheet. Take it a step further and one which also takes into account appreciation e.g. Yr 5 and 10. Why? There must be this magic bracket i.e. cost of purchase vs rental income that targets specific properties. Ack ROCE 15-20% but in real terms, you seem to like the £100k mark - why? I'm keen to know more based on your experience. LOVE the content and grateful you avoid the hard sell!

[TurkeyPropertyBeys]

Great explanation Jamie! How could we take the property appreciation into account along with the ROI. Let's say by the end of the year along with all annual rental income my property value increased by 10% for example. How do we take that into consideration?

[rickyfarci]

Hi Jamie. Can you make a video for the citizens of Countries in where the interest only mortgages are not available? Because the cash flow Is damaged by the repayment of the capital during the years. On the other hand the IRR of the investment Is very high. How can you consider that?

[tanyaedwards]

Great video as usual. I think it depends on the exit strategy for the property. Most of my properties are refurbs, flips or land purchases. Because I'm in the SE the numbers are quite large so showing the profit the investor will make after a 8 month refurb is more important to them. They tend to want to see ROI. Is one or the other better for different exits?? I understand how ROCE is preferable if you're going to BRR.

[lm]

Good Morning Jamie:

I hope that you are well.

How do I plan for my property to continue generating income and paying its bills etc once I die. At present my will states for all to be sold and distribute it. Buy I do not want that. I would like my legacy to continue. Have found nobody that can offer me legal advice as to how to do it.

Thanks in advance.

[madda_joe]

As a private investor with only one property. What about the tax implications now that you cannot offset the the costs?