Rental yield is the annual return on a property investment expressed as a percentage of the purchase price. It's the most commonly used metric to compare the income-generating potential of different investment properties across Australia.
Gross rental yield is calculated as: (Annual Rent / Purchase Price) x 100. It ignores all costs and is used for quick comparisons. Net rental yield deducts all costs — property management (~8%), council rates, water, insurance, maintenance and vacancy — from annual rent before dividing by purchase price. Net yield typically runs 1–1.5% below gross.
In 2026, a gross rental yield above 4% is considered solid for a capital city. Above 5% is strong. Above 6% is excellent but often comes with higher risk, regional location or specific property type factors. For regional areas, 5–8% gross yields are achievable.
Example: Property purchased for $620,000. Weekly rent: $490/week. Annual rent: $490 x 52 = $25,480. Gross yield: $25,480 / $620,000 x 100 = 4.11%.
For net yield, deduct annual costs: management ($2,038), rates ($1,800), insurance ($1,200), maintenance ($800) = $5,838. Net annual income: $19,642. Net yield: $19,642 / $620,000 = 3.17%.
High yield properties often deliver lower capital growth, and vice versa. The right balance depends on your investment strategy: investors seeking cash flow prioritise yield, while those building long-term wealth often accept lower yield for stronger capital growth. Ask Perry to model both scenarios for any property.
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