Getting into property investment? Then your main priority will be maximising the return you can get over the long term. This will be made up of two components 1) Capital Appreciation and 2) Rental Income.
It can be difficult to know if you are getting value for money from your investment unless you can compare it against other similar investments or an overall benchmark.
One key benchmark used for investing in buy-to-let properties in Ireland is the ‘Gross Rental Yield’.
The Gross Rental Yield can be calculated as the annual rental income divided by the purchase price of the property.
The property price should also include all the additional costs that are incurred, such as stamp duty, surveyor costs, engineer’s report, etc.
Below is a breakdown of the Average Gross Rental Yield for each county in Ireland (based on Q4 2021 data):
| County | Standardised Avg Rent | Median Price of Residential Properties | Average Gross Rental Yield |
|---|---|---|---|
| Carlow | €1,102.99 | €210,690 | 6.28% |
| Cavan | €778.07 | €169,985 | 5.49% |
| Clare | €963.40 | €210,387 | 5.50% |
| Cork | €1,247.71 | €288,873 | 5.18% |
| Donegal | €762.14 | €154,567 | 5.92% |
| Dublin | €1,972.23 | €496,652 | 4.77% |
| Galway | €1,200.57 | €270,671 | 5.32% |
| Kerry | €950.82 | €215,237 | 5.30% |
| Kildare | €1,373.73 | €338,874 | 4.86% |
| Kilkenny | €1,037.37 | €247,467 | 5.03% |
| Laois | €1,036.06 | €214,373 | 5.80% |
| Limerick | €1,203.31 | €236,057 | 6.12% |
| Longford | €835.44 | €142,298 | 7.05% |
| Louth | €1,184.72 | €245,833 | 5.78% |
| Leitrim | €739.70 | €143,457 | 6.19% |
| Mayo | €820.31 | €171,711 | 5.73% |
| Meath | €1,356.83 | €307,325 | 5.30% |
| Monaghan | €805.08 | €184,190 | 5.25% |
| Offaly | €897.42 | €189,933 | 5.67% |
| Roscommon | €864.68 | €149,433 | 6.94% |
| Sligo | €890.25 | €183,680 | 5.82% |
| Tipperary | €841.06 | €188,516 | 5.35% |
| Waterford | €1,030.55 | €223,571 | 5.53% |
| Westmeath | €1,011.57 | €215,385 | 5.64% |
| Wexford | €223,659 | €223,659 | 4.53% |
| Wicklow | €1,522.80 | €338,831 | 5.39% |
As we can see from the data, Longford currently offers the best value for money in terms of what rent you can receive as a percentage of the property price, coming in at 7.05%.
On the other end of the scale, Wexford properties are only yielding 4.53% on average, which may suggest property prices are more inflated there compared to other parts of the country.
Note – calculations used data from Q4 2021. Property prices and rental prices have continued to accelerate in the first half of 2022. Once more up-to-date data is released, I will update the workings to reflect the latest situation.
Information Sources:
Standardised Avg Rent – The Residential Tenancies Board (Full Report Here).
Median Price of Residential Properties – Geodirectory.ie – Residential Buildings Report (Full Report Here).
How to Calculate Net Rental Yield
No landlord gets to keep 100% of the rental income they charge. A better measure would be to calculate the ‘Net Rental Yield’ as it shows you what you actually get into your hand as a return from your property.
The net rental yield takes into account all the expenses that you incur such as income tax, local property tax, mortgage interest, repairs, maintenance, etc.
And then divide this annual net rental yield by the property price.
Disclaimer: This blog post is for informational and educational purposes only and should not be construed as financial advice.