Rental yield

Rental yield measures the annual income return from an investment property relative to its value. It is one of the primary metrics used to assess and compare investment property performance.

Gross rental yield

Gross Yield = (Annual Rental Income ÷ Property Value) × 100

For example, a property worth $800,000 generating $32,000 per year has a gross yield of 4.0%.

Net rental yield

Net yield accounts for holding costs:

Net Yield = ((Annual Rental Income − Annual Costs) ÷ Property Value) × 100

Net yield gives a more accurate picture of actual investment return.

What is a good rental yield?

Yield benchmarks vary significantly by location, property type, and market conditions. In general:

• Low yields tend to correspond to capital-growth markets, where investors accept lower immediate income in exchange for expected long-term appreciation.
• Moderate yields typically reflect balanced markets with steady rental demand and measured price growth.
• Higher yields are more common in regional, high-density, or emerging markets, often with greater volatility.

Always compare yield against the current cost of debt (interest rates) and local market conditions. A yield below your interest rate means holding costs exceed rental income and the property is cash flow negative.