Calculate the gross and net rental yield on an investment property. Gross yield shows raw income return; net yield accounts for ongoing expenses and gives a more accurate picture of the real return.
Rental Yield Calculator
What Is Rental Yield?
Rental yield measures the annual rental income from an investment property as a percentage of the property’s value. It’s one of the key metrics investors use to assess and compare investment properties.
$$\text{Gross Rental Yield} = \frac{\text{Annual Rent}}{\text{Property Value}} \times 100$$
$$\text{Net Rental Yield} = \frac{\text{Annual Rent} - \text{Expenses}}{\text{Property Value}} \times 100$$
Gross Yield vs Net Yield
| Metric | What it includes | Typical use |
|---|---|---|
| Gross yield | Annual rent ÷ property value | Quick comparison across properties |
| Net yield | (Rent − expenses) ÷ property value | More realistic cash flow estimate |
| Cash-on-cash return | Net rental income ÷ cash invested (deposit + costs) | Investor return on capital deployed |
Gross yield is quick to calculate and useful for comparing properties. Net yield gives a more accurate picture of ongoing cash flow but requires knowing the property’s actual expense profile.
Neither metric accounts for capital growth, which has historically been the primary return driver for Australian property investors.
Average Rental Yields by City — Australia (2026)
Rental yields vary significantly between cities and property types. Higher-priced cities (Sydney, Melbourne) tend to have lower yields but historically stronger capital growth. Lower-priced markets often offer higher yields but with less capital growth certainty.
| City | Typical gross yield (houses) | Typical gross yield (apartments) |
|---|---|---|
| Sydney | 2.5–3.5% | 3.5–5.0% |
| Melbourne | 2.8–3.8% | 3.5–5.0% |
| Brisbane | 3.5–5.0% | 5.0–6.5% |
| Perth | 4.0–5.5% | 5.0–7.0% |
| Adelaide | 3.5–5.0% | 4.5–6.0% |
| Hobart | 3.5–5.0% | 4.0–6.0% |
| Regional (varies widely) | 4.0–8.0%+ | 5.0–9.0%+ |
Indicative ranges based on CoreLogic and real estate market data circa 2025–26. Yields fluctuate with property values and rental market conditions.
What Is a Good Rental Yield in Australia?
There’s no universal answer — the “right” yield depends on your investment goals:
If your primary goal is capital growth: Yields of 2.5–4% may be acceptable in high-growth markets (Sydney, Melbourne) where capital appreciation is expected to be the dominant return.
If your primary goal is cash flow: Yields of 5–7%+ are needed to cover mortgage costs at current rates. At 6% mortgage rates, gross yields below 5% typically mean the property is negatively geared.
The neutral gearing point: At current interest rates (~6%), a property needs a gross yield of approximately 6–7% to be cash flow neutral (before accounting for management fees, maintenance and other costs). Most Australian capital city properties run at a deficit — meaning negative gearing.
Positive cash flow properties — typically found in regional areas or lower-priced markets — carry higher vacancy risk and may offer limited capital growth.
Rental Yield vs Total Return
Rental yield is only one component of total return from an investment property:
Total Return = Rental Yield + Capital Growth (+ Tax Benefits)
For many Australian investors, capital growth has been the dominant return. A Sydney property purchased in 2010 with a 3.5% gross yield that grew at 7% per year delivered a total return far in excess of its yield alone. However, past capital growth does not guarantee future growth.
Conversely, a high-yield regional property may deliver reliable cash flow with limited capital growth — and if selected poorly, may produce negative total returns.
Expenses to Include in Net Yield Calculation
When calculating net yield, include all ongoing costs (excluding mortgage interest, which is a financing cost):
| Expense | Typical annual amount |
|---|---|
| Council rates | $1,800–$3,500 |
| Water rates | $800–$1,500 |
| Property management (8–9%) | $2,000–$5,500 |
| Landlord insurance | $1,200–$2,500 |
| Body corporate (apartments) | $2,000–$10,000+ |
| Repairs and maintenance allowance | $1,000–$3,000 |
| Property agent letting fee | ~1–2 weeks rent |
| Total typical expenses | $8,000–$20,000+ |
As a rough rule of thumb, annual expenses typically represent 25–35% of gross rental income for a standard investment property. For apartments with high body corporate levies, this can be higher.
FAQ — Rental Yield Australia
Should I compare properties by gross yield or net yield?
Always use net yield for serious comparisons — gross yield ignores expenses, which vary significantly between property types. Apartments, for example, typically have higher body corporate fees that substantially reduce net yield relative to gross yield.
What yield do I need to cover my mortgage?
At 6.00% p.a. on a 90% LVR loan (10% deposit), you’re borrowing 90% of the property’s value at 6%. The interest cost alone is 5.4% of the property value per year. Add expenses of 1.5–2.5%, and you need a gross yield of 7–8% to break even — rare in Australian capital cities. Most capital city investment properties run at a cash deficit (negative gearing).
Does rental yield affect borrowing power?
Yes. When assessing investment property loan applications, lenders include rental income at 80% of the assessed rental (to account for vacancy). Higher yields reduce the net negative carry on the investment, which slightly improves servicing.
Yield calculations are estimates only. Actual rental income and expenses will vary. Rental yield is not a reliable predictor of investment performance. Capital growth, vacancy rates, and property-specific conditions significantly affect returns. For investment advice tailored to your situation, speak with a licensed financial adviser. Find one through MoneySmart.