Rental Yield
Returns & Analysis
The annual rental income from a property expressed as a percentage of its value.
Full Explanation
Gross rental yield is calculated by dividing the annual rent by the property's purchase price or current value. Net rental yield subtracts expenses (management fees, insurance, rates, maintenance) from the annual rent before dividing. Yield helps investors compare income potential across different properties and is a key metric for assessing cash flow viability.
Example
A property worth $500,000 earning $500/week rent ($26,000/year) has a gross rental yield of 5.2%.
Frequently Asked Questions
What is a good rental yield in Australia?
Gross yields of 4 to 6% are common for houses in capital cities, while regional areas and units can achieve higher yields. A good yield depends on your strategy: cash flow investors target higher yields, while capital growth investors may accept lower yields.
What is the difference between gross and net yield?
Gross yield uses total annual rent divided by property value. Net yield deducts expenses like management fees, insurance, rates, and maintenance from the annual rent before dividing. Net yield gives a more accurate picture of actual returns.