Rental Yield

Definition

Rental yield is the annual rental income generated by a property expressed as a percentage of its purchase price or current market value. Gross rental yield is calculated by dividing annual rent by the property price and multiplying by 100. Net rental yield subtracts expenses like management fees, insurance, and maintenance before calculating the percentage.

Why It Matters for Property Investors

Rental yield is a key metric for comparing investment properties and understanding their income-generating potential. A higher yield indicates stronger cash flow relative to purchase price. In Australia, gross yields typically range from 2–3% in premium inner-city suburbs to 6–8% in regional areas. Investors focused on cash flow prioritise high-yield properties, while growth investors may accept lower yields for stronger capital appreciation.