How to calculate rental yield
Gross and net rental yield, the formula for each, and what counts as a good yield for an Australian investment property.
Rental yield measures how much income a property earns relative to what it's worth. It's the quickest way to compare two properties or check your own cash flow.
Gross rental yield
Annual rent divided by property value. The quick version.
Formula: Gross Yield = (Annual Rent ÷ Property Value) × 100
Example: a $500,000 property renting for $500/week. Annual rent = $500 × 52 = $26,000. Gross yield = $26,000 ÷ $500,000 × 100 = 5.2%.
Net rental yield
Same idea, but council rates, insurance, management fees, maintenance and strata come off first. This is the version that reflects what lands in your account.
Formula: Net Yield = ((Annual Rent – Annual Expenses) ÷ Property Value) × 100
Example: same property, $8,000 in annual expenses this time. Net yield = ($26,000 – $8,000) ÷ $500,000 × 100 = 3.6%.
What’s a good yield?
For Australian investment properties in 2026, under 3% gross usually means you're betting on capital growth to do the heavy lifting, which is common in Sydney and Melbourne. 4–5% gross is the middle ground, typical of metro-fringe suburbs. Above 6% gross is high yield, often regional, and it can come at the cost of growth.
Yield vs growth
High-yield properties pay you now. High-growth properties build equity you cash in later. Many portfolios hold both, with some properties covering the bills and others compounding.
Use net yield
Gross yield looks better on a listing but ignores what ownership costs. Net yield, built from your real expenses, is the number to compare. The deal analyser works out gross yield and cash-on-cash return from a price and a weekly rent.
This article is general information, not financial or tax advice. It does not take your circumstances into account, so check with a licensed adviser or registered tax agent before you act on it.