How to calculate rental yield
- Start with the weekly rent the property achieves, not the appraisal range a selling agent quotes.
- Multiply it by 52 for the annual rent.
- Divide by the property value: the purchase price, or the price plus stamp duty and buying costs if you want the honest figure.
- Multiply by 100. That is your gross rental yield, as a percentage.
- For net yield, take the costs off first. Subtract a year of holding costs and an allowance for the weeks the property sits empty from the annual rent, then divide.
Rental yield is the rent a property earns in a year, expressed as a percentage of what the property is worth. It is the standard way Australian investors compare one property against another, because it strips out the purchase price and leaves you with a single number.
Rental yield formula
Gross rental yield
(Weekly rent × 52) ÷ Property value × 100
Net rental yield
((Weekly rent × 52) − Annual costs − Vacancy) ÷ Property value × 100
The only difference is what comes off the rent before you divide.
Worked example
A $750,000 property renting at $600 a week earns $31,200 a year. Divided by $750,000, that is a 4.16% gross yield.
Now take the costs off. Council rates $2,000, insurance $1,200, water $800 and maintenance $2,000 come to $6,000 a year. Allow 5% vacancy, which is about one tenant turnover, and you lose another $1,560 of rent. That leaves $23,640, or a 3.15% net yield. The headline number and the real one are a full percentage point apart.
How to calculate rental yield in Australia
Two things differ here. Rent is quoted weekly, so the annual figure is the weekly rent multiplied by 52. Treating it as four weeks a month understates the year by nearly a month's rent and shaves roughly 0.3 of a percentage point off a typical yield.
The costs that turn gross into net are also state-specific. Land tax thresholds differ in every state and territory, strata levies apply to most apartments, and the vacancy a suburb actually runs at varies far more than the 5% rule of thumb.
For the inputs themselves, our suburb research pages publish median sale prices from the public sale records, and for NSW suburbs a median rent from rental bond lodgements as well, so both sides of the calculation can come from the same market rather than from one listing.
Gross versus net rental yield
Gross yield uses rent and price only. It is the figure quoted in listings and by selling agents, because it is the larger of the two and it takes seconds to work out.
Net yield subtracts what it actually costs to hold the property: council rates, strata, insurance, water, maintenance, property management and the weeks the place sits empty between tenants. It is typically one to two percentage points below gross, and it is the number that tells you whether a property pays for itself.
Neither figure includes your mortgage. Yield measures the property against its own value, so it stays the same whether you paid cash or borrowed 80%. What the loan changes is your cash position, not the yield. Use the ROI calculator to bring repayments, negative gearing and capital growth into the picture.
The three numbers that move rental yield
- The price you pay: yield is measured against what the property cost you, so buying below market lifts the yield on day one and nothing you do to the rent later matches it. A buyer's agent earns their fee here.
- The rent it actually achieves: not the appraisal range a selling agent quotes. Check what comparable properties in the same street are currently leased at, and be honest about condition.
- The costs you forget: strata on an apartment, land tax once you cross the threshold in your state, and the weeks between tenants. These are what separate the gross figure from the one that lands in your account.
What is a good rental yield in Australia?
As a general guide, a gross yield of 4–5% is solid in an Australian capital city, and regional markets often run higher at 5–8%. Units usually out-yield houses in the same suburb, because the land component that drives price is smaller.
A high yield is not automatically the better buy. Yield and capital growth tend to pull against each other: the suburbs with the strongest long-term price growth are often the ones where rent has not kept pace with values, so they show thin yields. A property returning 7% in a market with flat prices can easily finish behind one returning 3% in a market that grows. Which matters more depends on whether you need the property to fund itself now or to be worth considerably more in ten years.
How accurate is this calculator?
It is exact arithmetic on the figures you enter, which means its accuracy is the accuracy of your inputs. Three things it deliberately leaves out are worth knowing.
- It ignores your mortgage. Yield measures the property against its own value, so it reads the same whether you paid cash or borrowed 80%. To bring repayments, negative gearing and capital growth in, use the ROI calculator.
- It has no tax in it. Rental income is assessable and most holding costs are deductible, so your after-tax position differs from the net yield here. Depreciation alone can move it: the depreciation calculator gives you that figure.
- Vacancy is an allowance, not a forecast. The default assumes roughly one turnover a year. In a tight market that is pessimistic; on a property that is hard to let it is optimistic.
Work out the rest of the numbers
- Suburb research pages: real median prices, rents and ten-year growth, so your inputs come from the market rather than from a listing.
- ROI calculator — the full picture including loan costs, tax and capital growth.
- Stamp duty calculator — the largest upfront cost, and part of what you have really paid.
- Borrowing power calculator — what a lender will actually advance you.
- Loan repayment calculator — what the property costs you to hold each month.
Common questions
What is rental yield?
Rental yield is the annual rental income expressed as a percentage of the property's value or purchase price. It is the key metric investors use to compare properties and assess potential return. A higher yield means better rental return relative to the price.
What is the difference between gross and net rental yield?
Gross yield uses just the annual rent and the property price, with no expenses taken out. Net yield deducts all property-related costs (rates, insurance, maintenance and the rest) from the rental income first, which makes it the more accurate picture. Net is typically 1–2 percentage points below gross.
Do units or houses have better rental yields?
Units usually show the higher gross yield in the same suburb, because the land component that drives the price is smaller while the rent difference is proportionally less. Net yield often closes that gap: strata levies on an apartment are a cost a freestanding house does not carry, and on older blocks with lifts or pools they can be substantial. Compare the two on net yield, not gross.
Should I prioritise rental yield or capital growth?
Both matter, and the right balance depends on your goals. High-yield properties give you better cash flow but often limited growth. Premium locations frequently show lower yields alongside stronger long-term gains. Many investors aim for the middle: a neutrally or positively geared property in an area that is still growing.
This rental yield calculator is provided for general information only and does not constitute financial, tax or legal advice. Always consult a licensed financial adviser and tax agent before making property investment decisions.