How to calculate rental yield
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.
The formula
(Weekly rent × 52) ÷ Property value × 100
That gives you gross yield. For net yield, take your annual holding costs and any vacancy 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.
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.
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.
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.
How do I calculate rental yield?
Multiply the weekly rent by 52 to get the annual rent, divide by the property price, then multiply by 100. For net yield, subtract your annual expenses from the annual rent before dividing. For example, $500 a week on a $600,000 property is ($500 × 52) ÷ $600,000 × 100 = 4.33% 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.