Gross vs net rental yield
Gross rental yield is the simplest measure: yearly rent divided by the property price. It's useful for quickly comparing properties, but it ignores costs.
Net rental yield takes off the real costs of owning a rental: property management fees (usually 5–9% of rent plus letting fees), council and water rates, landlord insurance, repairs, strata levies, land tax and weeks without a tenant. It's the number that tells you what the property actually earns.
Example: a $600,000 house rents for $550 a week. Gross yield is $28,600 ÷ $600,000 = 4.77%. After 2 vacant weeks, 7% management, $2,000 rates, $1,500 insurance and $1,500 maintenance, net income is $20,575, a net yield of 3.43%.
Rental yield examples
| Price | Rent | Gross yield | Net yield |
|---|---|---|---|
| $500,000 | $450/wk | 4.68% | 3.19% |
| $600,000 | $550/wk | 4.77% | 3.43% |
| $750,000 | $650/wk | 4.51% | 3.36% |
| $900,000 | $700/wk | 4.04% | 3.06% |
2 vacant weeks, 7% management, $2,000 rates, $1,500 insurance, $1,500 maintenance, no strata or land tax.
What's a good rental yield?
There's no single answer. High-growth capital city houses often have lower yields of 3–4%, because buyers expect capital growth. Units and regional properties often yield more, but may grow more slowly. Compare yield with your loan interest rate: if net yield is well below your rate, you'll need to top up the property each week, at least at first.
Next steps
See your weekly cost after interest and tax with the negative gearing calculator, and work out stamp duty and land tax before you buy.
Common questions
What is a good rental yield in Australia?
Many investors look for a gross yield of 4–5% or more, but it depends on the area. Capital city houses often yield 3–4%, while units and regional properties can yield 5–7%. Net yield, after costs, is usually 1–2 points lower.
What's the difference between gross and net rental yield?
Gross yield is the yearly rent divided by the price. Net yield first subtracts costs such as property management, council rates, insurance, strata, maintenance and vacancy, so it shows what the property really earns.
Does rental yield include mortgage interest?
No. Yield measures the property's return on its price, regardless of how you finance it. To include interest and tax, use the negative gearing calculator.
How do I calculate rental yield?
Gross yield = weekly rent × 52 ÷ property price × 100. For example, $550 a week on a $600,000 property is $28,600 ÷ $600,000 = 4.77%.
General information only, not financial or tax advice. Speak to a registered tax agent or licensed adviser about your situation.