How to Calculate Rental Yield

Rental yield measures how much income a property throws off relative to what it's worth, and it's the fastest way to compare two properties or check your own cash flow position.

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 it takes council rates, insurance, management fees, maintenance and strata off the top first — the version that reflects what actually 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 — 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. Most solid portfolios run both: some properties covering the bills, others quietly compounding.

The takeaway

Calculate net yield, not gross. Gross looks better on a listing but ignores what ownership actually costs. Track your real expenses and you'll know your true return, not the marketing version of it.