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HoldingCost

Rental yield calculator

Calculate gross and net rental yield to compare investment property returns.

Calculator property

Logic updated January 2026

This calculator computes both the gross and net rental yield of an investment property. Gross yield is the headline figure used in agent listings — annual rent as a percentage of purchase price. Net yield strips out annual expenses and shows the income return you actually keep before financing, the figure investors should compare across properties.

How this is calculated

Formula 

grossYield = (annualRent / purchasePrice) × 100 ; netYield = ((annualRent − annualExpenses) / purchasePrice) × 100 ; annualRent = weeklyRent × 52

Step-by-step

  1. Convert the weekly rent to an annual figure by multiplying by 52
  2. Calculate gross yield: divide annual rent by the purchase price and multiply by 100
  3. Subtract annual expenses (rates, insurance, management, maintenance) from annual rent to get net income
  4. Calculate net yield: divide net income by the purchase price and multiply by 100
  5. The gap between gross and net yield is the cost burden — typically 1.5–2.5 percentage points for established residential property
Rounding mode
ROUND_HALF_UP
Precision
20-digit internal precision (Decimal.js), rounded to 2 decimal places for display
Logic last reviewed

Assumptions & limitations

What this calculator assumes

  • Annual rent equals weekly rent multiplied by 52
  • Rent is assumed constant over the year — no vacancy or rent escalation
  • Expenses are assumed constant and already net of any tax deductions
  • No capital growth is included in yield
  • No financing costs are deducted — yield is a pre-leverage figure

What this calculator doesn’t account for

  • Does not model vacancy periods or rent rises over time
  • Does not include capital growth, which often dominates total return
  • Does not factor in financing costs (mortgage interest)
  • Does not include depreciation or tax deductions
  • Does not include capital improvements that may justify higher rent

Worked example

An investor compares a $750,000 property renting for $650 a week with $9,000 of annual expenses.

Input Value
Purchase price $750,000
Weekly rent $650
Annual expenses $9,000

Gross yield: 4.51% — Net yield: 3.31%

Annual rent is $33,800 ($650 × 52). Gross yield = $33,800 ÷ $750,000 × 100 = 4.51%. Subtracting $9,000 of expenses gives net income of $24,800. Net yield = $24,800 ÷ $750,000 × 100 = 3.31%. The 1.2-point gap is the cost burden — this property keeps about 73% of its gross rent after expenses.

Frequently asked questions

What is the difference between gross and net yield?

Gross yield uses headline rent only — it's what real-estate listings advertise. Net yield strips out the recurring costs of holding the property: rates, insurance, management, maintenance, land tax. Net yield is the more useful comparison number because it reflects what's left to cover financing and provide a return — gross yield can flatter a high-cost property.

What is a good rental yield?

It depends on the market. In high-growth capital cities, residential gross yields of 3–4.5% are typical; regional or commercial properties can yield 5–8%+. As a rule of thumb, a yield well below the prevailing mortgage rate means the property relies entirely on capital growth — yields above the mortgage rate can be cash-flow positive even with leverage. Compare against bonds and term deposits as alternatives.

How do vacancy rates affect yield?

This calculator assumes 100% occupancy. Real properties experience vacancy — typically 1–4 weeks per year. Each vacant week reduces effective annual rent by about 2%, so a 4-week vacancy turns a 4.5% gross yield into roughly 4.15%. Build a realistic vacancy assumption into your numbers (often via a 5% deduction from gross income) when comparing real-world outcomes.

Yield vs capital growth — which matters more?

Long-term total return is yield plus capital growth. Yield is the income you collect each year; growth is the change in property value. High-growth markets often have low yields and vice versa — the 'yield trap' is buying high-yield property in a flat market and finding total return is mediocre. Most investors target a balance based on whether they need income now or wealth later.

Does this calculator account for financing?

No — the yield figures here are pre-leverage. They tell you what the property earns from rent relative to its full purchase price, regardless of how much you borrow. Once you add a mortgage, the cash-on-cash return on your deposit can be very different. Use this calculator alongside the property holding cost calculator to get the post-financing picture.

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