Whether you’re buying your first investment property or reviewing the performance of an existing one, knowing how to calculate rental yield is essential to making smart decisions in real estate.
Rental yield gives you a snapshot of how much return your investment property is generating compared to its value helping you assess profitability, compare opportunities, and plan your next move.
At Credit Hub Australia, we’re here to break it down clearly and simply. Let’s walk through the basics, how to work it out, and what makes a rental yield “good.”
What Is Rental Yield?
Rental yield is the percentage return an investor can expect from a property, based on the rental income it generates annually relative to the property’s value.
It answers the question: “How much am I earning from this property each year compared to what it’s worth or what I paid?”
How Do You Work Out Rental Yield?
There are two types of rental yield:
1.Gross Rental Yield
This is the simplest form. It does not include expenses like maintenance, taxes, or insurance.
Formula:
Gross Rental Yield (%) = (Annual Rent ÷ Property Value) × 100
Example:
- Annual Rent: $24,000 ($2,000/month)
- Property Purchase Price: $500,000
Gross Yield = ($24,000 ÷ $500,000) × 100 = 4.8%
2.Net Rental Yield
This gives a more accurate picture of your return by subtracting annual costs.
Formula:
Net Rental Yield (%) = [(Annual Rent – Annual Expenses) ÷ Property Value] × 100
Example:
- Annual Rent: $24,000
- Expenses: $6,000 (maintenance, management fees, insurance, etc.)
- Property Price: $500,000
Net Yield = (($24,000 – $6,000) ÷ $500,000) × 100 = 3.6%
What Is a Good Rental Yield in Australia?
There’s no “one size fits all,” but here’s a rough benchmark:
- 3-4%: Common in metro areas with higher property values (Sydney, Melbourne)
- 5-6%+: More common in regional or outer suburban areas
The right yield depends on your investment strategy. Some investors prefer lower yield with higher capital growth, while others chase higher yield with stable cash flow.
This 2025 report by CoreLogic shows that average gross rental yields in Australia vary from 3.4% in Sydney to 5.9% in regional Queensland a reminder to research location-specific data when investing.
Factors That Can Affect Rental Yield
- Location – High-demand suburbs may have lower yields but better growth
- Property Type – Apartments vs houses, furnished vs unfurnished
- Market Conditions – Interest rates, vacancy rates, rental demand
- Upkeep Costs – Older homes may have higher ongoing expenses
Why Rental Yield Matters
- Helps compare investment opportunities
- Evaluates if you’re getting a solid return
- Supports loan and risk assessment (especially when applying through a broker like Credit Hub)
- Ensures you’re factoring in ongoing income, not just long-term value
Rental Yield Calculator (Coming Soon)
We’re currently building a free rental yield calculator at Credit Hub Australia stay tuned! It’ll help you estimate gross and net yield instantly for any property.
Need Help Making an Investment Move?
Our mortgage brokers at Credit Hub Australia work closely with investors across Australia to assess property performance, compare loan options, and structure finances for maximum return.
Ready to optimise your rental property strategy? Get in touch with us today.
FAQs:
1.How do you calculate rental yield?
Use this formula:
Gross Yield = (Annual Rent ÷ Property Value) × 100
Net Yield = [(Annual Rent – Expenses) ÷ Property Value] × 100
2.What is a good rental yield in Australia?
A good yield varies, but 4%-6% is considered decent depending on location. Regional areas often deliver higher yields than major cities.
3.What expenses are included in net yield?
Typical expenses include council rates, property management fees, maintenance, insurance, and repairs.
4.Can Credit Hub help with investment loans?
Absolutely. We specialise in investment home loans tailored for rental properties. We’ll help you structure your finances and unlock better yield opportunities.
Disclaimer:
The information provided by Credit Hub and its affiliates is for general informational purposes only. While we strive for accuracy, readers should verify any details before making financial decisions. Credit Hub accepts no liability for errors, omissions, or actions taken based on this content.