yield

Yield refers to the return on an investment, typically expressed as a percentage. It represents the income generated by an investment relative to its cost or current market value. Yield can be calculated in various ways depending on the type of investment.

There are several types of yield commonly used:

1. Rental Yield: Rental yield is a measure of the income generated by a rental property relative to its cost or market value. It is calculated by dividing the annual rental income by the property's purchase price or current market value and expressing the result as a percentage. Rental yield provides investors with insight into the potential income stream generated by the property.

2. Yield on Cost: Yield on cost is a measure of the return on an investment property relative to its original purchase price. It is calculated by dividing the annual income generated by the property (such as rental income or net operating income) by the initial purchase price and expressing the result as a percentage. Yield on cost helps investors assess the performance of their investment relative to the initial investment amount.

3. Yield to Maturity (YTM): In the context of real estate debt investments such as bonds or mortgage-backed securities, yield to maturity represents the total return expected by an investor if the investment is held until maturity. It takes into account both the interest income received and any capital gains or losses realized upon maturity. Yield to maturity is calculated by considering the present value of all future cash flows from the investment and expressing the result as an annualized percentage.

Overall, yield is a key metric used by investors to evaluate the performance and potential returns of real estate investments, whether in terms of rental income, capital appreciation, or total return.