In short
- Gross rental yield is the year’s rent divided by the price, times 100.
- Net rental yield takes the running costs off the rent first.
- Neither one counts the loan, the tax or the growth, so a high yield can still cost you money each week.
How to calculate gross rental yield
Take the weekly rent, multiply it by 52 to get the year’s rent, divide by the price you pay, and multiply by 100.
Gross yield = (weekly rent x 52) / price x 100
A home bought for $650,000 that rents for $600 a week earns $31,200 a year. $31,200 divided by $650,000 is 0.048, so the gross yield is 4.8%.
How to calculate net rental yield
Net yield takes the running costs off the rent before you divide. Using the same home, with costs for one year that might look like this:
- property management at 7% of the rent: $2,184
- council rates: $2,000
- water: $800
- insurance: $1,500
- repairs and maintenance: $1,316
Total costs: $7,800.
Net yield = (year’s rent - year’s costs) / price x 100
$31,200 less $7,800 is $23,400. Divided by $650,000, that is a net yield of 3.6%.
Some people add the buying costs, such as stamp duty, to the price before they divide. That gives a lower, more honest figure. Whichever way you choose, use the same way for every property you compare.
Why yield alone can mislead you
Yield is a starting point. It leaves out the four things that decide what a property costs you to hold:
- The loan you carry. Borrow 80% of that $650,000 home at 6.12%, the 30-year average rate, interest only, and the interest is $31,824 a year: more than the $23,400 left after costs. Before tax, the home costs you about $162 a week.
- Tax and depreciation. Deductions can soften that weekly figure, and how much depends on your income, the home and the rules it falls under since the 2026 changes.
- Weeks without a tenant. A yield assumes rent every week. A vacancy, or a slow re-letting, comes straight off the top.
- Growth in value. A high yield is often found where prices grow slowly. Over ten or twenty years, growth in the land can count for more than a point of yield.
So two homes with the same yield can cost you very different amounts each week, and a lower yield can be the better home to hold.
From yield to your weekly figure
Yield tells you how hard the rent works against the price. The figure you live with is the weekly one: what the home costs you after the rent, the loan, the costs, the tax and the depreciation. The Cash Flow Analysis works that out from your own figures, on this year’s tax rules, and lets you try a rate rise or a rent review before you sign.
Nicholas Lockhart
Out of pocket each week: how much is too much? →
Positive or negative gearing: what cash flow positive means →
Education only, not personal or financial advice. The example is illustrative, not a forecast.