The formula, your substituted values, and the evaluated result are shown below.
Results are estimates. Rates should be entered as annual percentages unless the field states otherwise.
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The gross yield ignores expenses: 27,040 ÷ 650,000 = 4.16%. Always ask which one a figure is.
Typical expenses to include
Expense
Typical range
Property management
5–9% of rent, plus letting fees
Council rates and water
varies by council
Landlord insurance
a few hundred to $2,000+ a year
Repairs and maintenance
1% of the property value a year is a rough guide
Strata levies (units)
often $2,000–$6,000+ a year
Vacancy
allow 2–4 weeks' rent a year
Yield isn't the whole return
Capital growth: many Australian investors accept lower yields for expected price growth.
Interest costs: yield doesn't include your mortgage interest. With a loan, your cash flow may be negative even with a decent yield.
Tax: negative gearing, depreciation and capital gains tax all affect the after-tax return. Speak to a tax adviser.
Purchase costs: include stamp duty and legal fees in the property cost for a truer yield.
Common mistakes
Comparing a gross yield in one suburb with a net yield in another.
Forgetting vacancy and maintenance.
Using the purchase price from years ago instead of today's value to judge current performance.
What is a good rental yield in Australia?
Gross yields around 4–5% are common for houses in many capital cities. Units and regional properties are often higher. Net yields are usually 1–2 points lower.
How do I calculate gross rental yield?
Annual rent ÷ property price × 100. For $520 a week on a $650,000 house, that's 4.16%.
Should I include my mortgage in the yield?
No. Yield measures the property's own return. Assess mortgage costs separately in your cash flow.
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