Rental Yield Calculator

What Is Rental Yield?

Rental yield is the annual return your investment property generates from rent, expressed as a percentage of the property's value. Think of it like an interest rate on a savings account, but for property.

There are two types: gross yield and net yield.

Gross yield looks only at rental income versus property value. It ignores all costs. It's the number real estate agents quote because it's simple and always looks better. Gross yield is useful for quick comparisons between properties or suburbs — but it doesn't tell you what you'll actually earn.

Net yield subtracts annual expenses from rental income before dividing by the property value. It shows what the property actually earns after the bills are paid. Net yield is the more honest number — and the one most investors don't calculate until they're already holding the property.

The gap between gross and net can be significant. A property with 5% gross yield might only deliver 3% net yield once council rates, insurance, maintenance, and management fees are accounted for. That's a 2 percentage point gap that matters when you're comparing investments.

Use the calculator above to see both figures for your property.

How to Calculate Gross and Net Rental Yield

Gross rental yield formula

Gross Yield = (Weekly Rent × 52) ÷ Purchase Price × 100

Example: $550/week rent on a $650,000 property = $28,600 ÷ $650,000 = 4.40% gross yield.

Net rental yield formula

Net Yield = (Annual Rent − Annual Expenses) ÷ Purchase Price × 100

Expenses to include in net yield:

• Council rates
• Water rates (landlord portion)
• Building and landlord insurance
• Strata or body corporate levies
• Property management fees (if using a PM)
• Repairs and maintenance
• Land tax (if applicable)
• Vacancy costs (weeks the property sits empty between tenants)

What NOT to include:

• Mortgage interest — yield measures the return the property itself generates, independent of financing. Mortgage interest affects cash flow, which is a different calculation. For a full picture including your mortgage, see our Cash Flow Calculator.
• Depreciation — this is a tax deduction, not an operating expense.

Worked example

Let's walk through a full calculation:

• Property value: $650,000
• Weekly rent: $550 ($28,600/year)
• Council rates: $2,000
• Water rates: $800
• Insurance: $1,800
• Maintenance: $2,000
• PM fees at 8.5%: $2,431
• Vacancy (2 weeks): $1,100
• Total expenses: $10,131

Net income: $28,600 − $10,131 = $18,469
Net yield: $18,469 ÷ $650,000 = 2.84%

Compare that with the 4.40% gross yield. That's a 1.56 percentage point gap — mostly driven by expenses the landlord can control. The largest single controllable expense? Property management fees at $2,431.

What's a Good Rental Yield in Australia?

Yield expectations vary dramatically depending on where your property is. Here are the approximate ranges across Australian capital cities:

• Sydney: 2.5%–3.5% gross for houses, approximately 4% for units. The lowest yields nationally. Investors rely heavily on capital growth.
• Melbourne: 3.0%–3.8% gross for houses, approximately 4.4% for units. A similar growth-focused strategy to Sydney.
• Brisbane: 3.5%–4.5% gross. Strong population growth has supported both rents and values.
• Perth: 3.8%–5.5% gross (houses ~4%, units ~5.5%+). Currently one of the strongest yield markets among capital cities, driven by tight vacancy rates — though rapid price growth through 2025 has compressed yields from recent highs.
• Adelaide: 4.0%–5.5% gross. A strong recent performer with population growth and constrained supply.
• Regional areas: 5%–8%+ gross, but with higher vacancy risk and less predictable capital growth.

General benchmarks:

• Below 3% gross: Low yield (growth-focused investment, common in Sydney and Melbourne)
• 3%–5% gross: Moderate yield (typical across most capital cities)
• 5%–7% gross: Strong yield
• Above 7% gross: Very high yield (common in mining towns, regional centres — check vacancy risk)

These are approximate ranges and shift with market conditions. Always compare against current listings in the specific suburb, not just city-wide averages.

Important caveat: A low yield isn't necessarily bad. A property in a well-located Sydney suburb might yield 3% but appreciate 5%–7% per year. A high-yield property in a mining town might deliver 8% yield but face vacancy risk and flat capital growth. Total return = yield + capital growth.

Why Net Yield Matters More Than Gross

Gross yield is a screening tool — useful for quickly comparing properties on realestate.com.au. Net yield is the decision-making tool — it tells you what the property actually puts in your pocket.

Two properties might both show 5% gross yield, but if one has $5,000/year in expenses and the other has $12,000/year (strata, higher rates, PM fees), their net yields will be very different. The first might net 4.2%, the second might net 3.2%. That 1% gap compounds significantly over a decade of ownership.

The biggest controllable expense affecting net yield is usually property management fees. For a typical $550/week property, PM fees of 8.5% plus letting fees and extras can add $3,000–$4,500/year to your expenses. Removing PM fees by self-managing can improve net yield by 0.4–0.7 percentage points — which is significant, especially across a portfolio of multiple properties.

The calculator above shows exactly how much your PM fees are reducing your yield — and what your net yield would look like self-managing with Landlord Wise instead. You can also use our Property Management Fees Calculator to see the full breakdown of what your PM is charging you.

How to Improve Your Rental Yield

1. Increase rent to market levels. Many landlords leave money on the table by not reviewing rent regularly. If comparable properties are renting for more, a market-rate increase lifts your yield immediately. Use our Rent Increase Calculator to see what an increase means in dollar and percentage terms, and understand the rules for your state.
2. Reduce expenses. Review insurance annually for better quotes. Challenge council rate assessments if you believe they're too high. Negotiate strata levies through the body corporate. Self-manage to eliminate PM fees — for most landlords, this is the single largest saving available.
3. Reduce vacancy. Every empty week costs you a full week of rent. Good tenant selection, responsive maintenance, and fair treatment reduce turnover. Tools like tenant portals and automated communication help keep good tenants longer.
4. Add value. Minor renovations (new kitchen, updated bathroom, air conditioning) can justify a higher rent. Calculate whether the renovation cost delivers a meaningful yield improvement before committing.
5. Buy in higher-yield markets. If you're still looking, Perth and Adelaide currently offer significantly better yields than Sydney and Melbourne for similar quality properties.

Rental Yield vs Cash Flow vs Total Return

These three metrics are related but measure different things. Understanding the distinction helps you make better investment decisions.

• Yield measures the return from rent as a percentage of property value. It ignores financing entirely.
• Cash flow measures actual money in your pocket each month after ALL costs including mortgage repayments. A property can have a decent yield but still be cash-flow negative if the mortgage is large.
• Total return combines rental income AND capital growth. Most Australian property wealth has been built through capital growth, with rental income covering the holding costs along the way.

A negatively geared property (expenses exceed rental income) can still be a strong investment if capital growth is sufficient. Many successful Australian investors deliberately accept low yields in high-growth areas, knowing the tax deductions offset the short-term cash shortfall.

Our Cash Flow Calculator shows your actual monthly position including mortgage repayments. This yield calculator helps you understand the property's return from rent alone — independent of how you've financed it.

Tracking Your Actual Yield Over Time

The calculator above gives you a point-in-time snapshot, but actual yield changes as rents increase, expenses fluctuate, and property values move.

Tracking real income and expenses throughout the year gives you an accurate net yield rather than an estimate. Most landlords only calculate yield when buying — but reviewing it annually helps you spot when a property is underperforming and take action before the gap widens.

If your yield is declining, the cause is almost always one of three things: expenses creeping up faster than rent, vacancy increasing, or the property value rising while rent stays flat (which isn't necessarily bad — it means your capital growth is strong).

Landlord Wise tracks your rental income and expenses automatically, so you can see your actual yield at any time — not just an estimate.

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Frequently Asked Questions

What is a good rental yield in Australia?

Gross yields of 3%–5% are typical across Australian capital cities. Darwin currently delivers the highest capital city yields at around 6%–6.5%. Perth and Adelaide also perform strongly at approximately 3.8%–5.5% and 4.0%–5.5% respectively, while Sydney is lowest at 2.5%–3.5%. A yield above 5% is generally considered strong, but lower-yielding properties in well-located areas can still be excellent investments when capital growth is factored in. Regional areas can reach 7%+ but often come with higher vacancy risk.

What is the difference between gross and net rental yield?

Gross yield is calculated using annual rent divided by the purchase price with no deductions. Net yield subtracts annual operating expenses (council rates, water, insurance, maintenance, strata, property management fees, land tax, and vacancy costs) before dividing by the purchase price. Net yield gives a more accurate picture of your actual return. The gap between gross and net is typically 1–2 percentage points.

Should I include mortgage repayments when calculating rental yield?

No. Rental yield measures the return the property generates from rent, independent of how you financed it. Mortgage repayments affect your cash flow, which is a separate calculation. Yield allows you to compare properties on a like-for-like basis regardless of each investor's loan structure or deposit size.

How do I increase the rental yield on my investment property?

You can increase yield by raising rent to market levels, reducing operating expenses (self-managing instead of using a property manager is the largest single saving for most investors), minimising vacancy periods, or making improvements that justify a higher rent. Even a $20/week rent increase on a $650,000 property adds 0.16 percentage points to your gross yield.

Is rental yield more important than capital growth?

Neither is more important on its own. Yield provides ongoing income to cover holding costs, while capital growth builds long-term wealth. Most successful Australian property investors have built wealth primarily through capital growth, with rental income offsetting holding costs. The best strategy depends on your financial situation, tax position, and how long you plan to hold the property.

What expenses should I include when calculating net rental yield?

Include all recurring operating costs: council rates, water rates (landlord portion), building and landlord insurance, strata or body corporate levies, property management fees, repairs and maintenance, land tax (if applicable), and vacancy allowance. Do not include mortgage interest or depreciation — these affect cash flow and tax deductions respectively, not yield.

How does removing a property manager affect my rental yield?

Property management fees typically represent the largest controllable expense for most landlords. On a $550/week property with an 8.5% management fee plus letting fees and extras, PM costs can reach $3,000–$4,500 per year. Removing these expenses and self-managing (or using a flat-fee platform like Landlord Wise at $600/year) can improve net yield by 0.4–0.7 percentage points.

What yield should I look for when buying an investment property?

Use gross yield as an initial screening tool when browsing listings. Properties above 4% gross in capital cities are worth investigating further. Always calculate net yield before making a decision — it reveals the actual return after expenses. Consider yield alongside capital growth potential, vacancy rates, and the quality of the location. A 3% yield in a high-growth suburb may outperform a 7% yield in a stagnant regional market over a 10-year hold.