Investor is looking at a property asking $620,000 that is currently tenanted at $450 per week. Before they call the agent back, they need to know what the yield actually is after expenses -- not the headline gross figure.
Rental Yield Calculator
Investment
Typically 7–10% of rent in AU
Rule of thumb: 1% of property value
Gross yield = (Annual rent ÷ Property value) × 100. Simple but ignores costs.
Net yield = ((Annual rent − All annual costs) ÷ Property value) × 100. This is what you actually earn.
A property with 5% gross yield might only return 3–3.5% net after costs. Target 4%+ net in AU for positive cash flow (depending on leverage).
Net yield = ((Annual rent − All annual costs) ÷ Property value) × 100. This is what you actually earn.
A property with 5% gross yield might only return 3–3.5% net after costs. Target 4%+ net in AU for positive cash flow (depending on leverage).
Reference: ASIC MoneySmart — Investment Property
Results are estimates for planning purposes. Verify with current standards and a qualified professional.
1 What this calculator does
Calculates gross rental yield and net rental yield from property value, weekly rent and annual expenses. Net yield accounts for council rates, insurance, property management fees and maintenance. Flags whether the property is likely positively or negatively geared.
2 Formula & professional reasoning
Annual rent = Weekly rent x 52
Gross yield (%) = Annual rent / Property value x 100
Net annual rent = Annual rent - Rates - Insurance - Management fee - Maintenance
Net yield (%) = Net annual rent / Property value x 100
Gross yield is the quick comparison metric -- but net yield is what actually flows through to the investor's pocket. For most Australian investment properties, the difference between gross and net yield is 1-2 percentage points. A property yielding 5% gross may yield only 3.5% net after expenses. Properties with gross yields above 5% and net yields above 4% are typically positively geared (income exceeds costs) when interest costs are favourable.
3 Worked examples
⚠️ Illustrative example only — not clinical or professional instruction.
Basic
Suburban house -- full expense calculation
Given: Property value: $620,000 | Weekly rent: $450 | Rates: $2,200/yr | Insurance: $1,800/yr | Management: 8.5% | Maintenance: $3,000/yr
Working:
Annual rent: $450 x 52 = $23,400 | Management fee: $23,400 x 0.085 = $1,989 | Total expenses: $2,200 + $1,800 + $1,989 + $3,000 = $8,989 | Net rent: $23,400 - $8,989 = $14,411 | Gross yield: $23,400 / $620,000 x 100 | Net yield: $14,411 / $620,000 x 100Answer: Gross yield: 3.77% | Net yield: 2.33%
💡 At 2.33% net yield and a 6.5% mortgage rate on a $496,000 loan, this property is negatively geared by approximately $17,000/yr before depreciation.
Standard
Regional property -- higher yield
Given: Property value: $380,000 | Weekly rent: $420 | Rates: $1,800 | Insurance: $1,400 | Management: 10% | Maintenance: $2,500
Working:
Annual rent: $21,840 | Management: $2,184 | Total costs: $7,884 | Net rent: $13,956 | Gross: $21,840 / $380,000 | Net: $13,956 / $380,000Answer: Gross yield: 5.75% | Net yield: 3.67%
💡 5.75% gross is a solid yield for a regional property. At 3.67% net, the property still has a funding gap against a 6.5% mortgage rate but the gap is smaller. Strong yields often trade off with lower capital growth.
Advanced
Commercial comparison -- residential vs commercial
Given: Residential: value $800K, rent $600/wk, expenses $25,000/yr | Commercial: value $800K, rent $1,100/wk, expenses $8,000/yr (outgoings to tenant)
Working:
Residential net yield: ($31,200 - $25,000) / $800,000 = 0.78% | Commercial net yield: ($57,200 - $8,000) / $800,000 = 6.15%Answer: Residential net yield: 0.78% | Commercial net yield: 6.15%
💡 Commercial properties typically deliver higher net yields because outgoings (insurance, rates, maintenance) are often paid by the tenant. However commercial carries higher vacancy risk and requires different financing.
4 Sanity check
Typical Australian rental yield benchmarks
Gross yield: Capital city houses 2.5-4.5% | Regional 4.5-7% | Units 4-6% | Net yield: Typically 1-2% below gross
Yield vs capital growth trade-off
High-yield properties (regional, units) often deliver lower capital growth | Premium suburbs deliver low yield but higher long-run capital growth
Most investors need both yield and growth for a balanced portfolio.
Net yield to assess gearing
Net yield above mortgage rate = positively geared | Net yield below mortgage rate = negatively geared
At 6.5% mortgage rate, most Australian residential investment properties are negatively geared.
Vacancy rate impact
A 3% vacancy allowance reduces effective annual rent by approximately $700 on a $450/week rental
Factor in vacancy when comparing gross and net yields.
5 Common errors
| Error | Cause | Consequence | Fix |
|---|---|---|---|
| Using gross yield alone for investment decisions | Not accounting for expenses | Property appears profitable but is actually deeply negatively geared | Always calculate net yield. For investment decisions, also factor in mortgage interest cost to assess true cash flow and gearing position. |
| Using current market value instead of purchase price for yield calculation | Wanting to show current yield looks better as the property has grown | Misleads on actual investment return relative to what was paid | For historical performance assessment use purchase price. For current opportunity cost analysis (should I sell?) use current market value. Be clear which basis you are using. |
| Not including a vacancy allowance | Assuming the property is tenanted 52 weeks per year | Net yield overstated by 2-4% annually -- actual cash flow lower than projected | Apply a 2-4% vacancy rate to annual rent. Multiply annual rent by 0.97 (3% vacancy) before calculating net yield. |
| Underestimating maintenance costs | Using a low maintenance figure for new properties, then not updating when property ages | Cash flow significantly worse than modelled as the property ages and repairs increase | Use 1-2% of property value per year as a maintenance provision. A $600,000 property should budget $6,000-$12,000/yr for maintenance including periodic capital works. |
6 Reference & regulatory links
7 Professional workflow
Common tools used alongside this one:
Negative Gearing Calculator
After calculating net yield, use Negative Gearing to quantify the tax benefit of the shortfall
→
Landlord Cash Flow Calculator
Landlord Cash Flow Calculator adds the mortgage repayment to get the true monthly out-of-pocket cost
→
Property Investment ROI
Combine net yield with capital growth in Property Investment ROI for total return assessment
→