Rental yield calculator
Gross and net rental yield, with vacancy and running costs taken out — the figure an agent’s "yield" usually is not.
Net rental yield
2.99%
gross yield is 4.51% — expenses take 30% of the rent
- Gross yield
- 4.51%
- Net rent a year
- $22,700
- Net a week
- $436.54
| Rent for 50 weeks | $32,500 |
|---|---|
| Expenses | -$9,800.00 |
| Net rent | $22,700 |
| Total outlay incl. purchase costs | $758,000 |
A $650-a-week property at $720,000 shows a 4.69% gross yield and closer to 3.2% net once expenses and two vacant weeks are counted.
How this is calculated
How this is calculated
Gross yield is rent over price
Annual rent divided by the purchase price. It ignores every cost of ownership, which is why it is the number quoted in listings and the least useful one for a decision.
gross yield = annual rent ÷ purchase priceNet yield counts what you actually keep
Rent for the weeks actually let, minus running costs, divided by the total outlay including purchase costs. Two vacant weeks alone removes 3.8% of the rent before a single expense.
net yield = (rent − expenses) ÷ (price + purchase costs)Worked example: $720,000 property renting at $650 a week
| Price | $720,000 |
|---|---|
| Rent | $650 a week |
| Vacancy | 2 weeks |
| Expenses | $9,800 |
| Gross yield | 4.69% |
|---|---|
| Net yield | about 3.2% |
| Net rent | about $22,700 |
The gap between 4.69% and 3.2% is the entire cost of ownership, and it is the difference between beating a term deposit and not.
What this assumes
- Rent is the actual achievable rent, not the asking rent.
- Expenses exclude mortgage interest.
- No allowance for capital growth.
- Figures are before income tax.
Where this commonly goes wrong
- Two vacant weeks is optimistic in many markets; four weeks removes 7.7% of gross rent and about half a point of net yield.
- Property management at 6–8% plus letting fees is a real cost that listings almost never include in a quoted yield.
- Yield says nothing about total return — a 3% yield with 5% growth beats a 6% yield with no growth, and only one of those is visible here.
Questions
What is a good rental yield?
It depends on the market and what you are buying it for. In expensive capital cities, 3–4% gross is common and the return is expected to come from growth. Regional and higher-yield markets can run 5–7% gross with slower growth.
What is the difference between gross and net yield?
Gross divides annual rent by the price and ignores everything else. Net subtracts vacancy and running costs and divides by the full outlay including purchase costs. On typical numbers net is 1–1.5 points below gross.
Should the mortgage be in the expenses?
Not for yield. Yield measures the property, not how you financed it. Include the mortgage when you calculate cash flow, which is a different and equally important question.
How much should I allow for vacancy?
Two weeks is a common planning figure in a tight rental market and four is safer in a soft one. Each vacant week removes about 1.9% of annual rent, so the assumption moves net yield by a meaningful amount.
Do purchase costs belong in the calculation?
For net yield, yes. Transfer duty, legal fees and inspections are capital you have committed and will not get back, so measuring return against the price alone overstates the yield by several percent of the outlay.
Does a high yield mean a good investment?
Not on its own. High yields often compensate for weaker capital growth, higher vacancy risk or a shorter building life. Total return is yield plus growth, and yield is only the half you can see today.
Related tools
Sources
This calculator does arithmetic on the figures you enter. It does not account for tax, fees, or your personal circumstances.
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