For what purpose is the yield used in property investment?

The yield in property investment is primarily used to analyze the potential return on investment. This financial metric allows investors to understand the profitability of a property relative to its purchase price or total investment. Yield is typically expressed as a percentage and is calculated by taking the income generated by the property (such as rent) and dividing it by the total investment cost. By focusing on yield, property investors can make informed decisions about purchasing, holding, or selling a property based on its ability to generate income.

Understanding yield is essential for assessing an investment's performance over time and comparing different investment opportunities, as it provides a clear picture of how much financial return can be expected in relation to the amount invested. This approach helps investors prioritize properties that are likely to maximize their profit potential.