Yield and flow in real estate: two numbers that must be calculated separately
How to calculate gross return, net return and cash flow after financing an apartment for investment in Israel.
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Return measures the income relative to the investment, and flow measures how much money is left or missing each month. Calculates net return after maintenance, unoccupied, insurance, management and relevant taxes. Then the financing payment is deducted from the monthly income. An asset can show a positive return and yet generate a negative flow.
Written and professionally reviewed by the Ailon Financing Solutions team
Three layers of testing
First calculate gross return. After that, the purchase tax and other costs are added to the price and expenses are deducted from the rent. Finally, check the flow after the mortgage repayment.
Also run a scenario where the rent is lower, there is an empty month and maintenance costs are increasing. This is how it is revealed if the investment is based on a real margin. The funding can be examined inInvestor service and the tax bPurchase tax calculator.
A guide to planning financing at the property portfolio level, with reserve, repayment ratio, order of capital use and stress tests before the next transaction.
