Gross rental yield is the annual rent divided by the purchase price, times 100. Net rental yield is the annual rent minus the costs of holding the property, divided by the same price, times 100. The listing almost always quotes gross. The property you actually hold runs on net, and the gap between the two is usually where a "solid yield" turns into a weekly bill.
That is the whole formula. The rest of this piece is about the bit most calculators skip: what goes into the costs line, which rent figure you should trust, and why net yield is not the same thing as your cash flow once a loan is involved. If you have read my piece on commercial property yield in Australia, this is the residential version of the same habit. Find out which number sits under the percentage before you argue about the percentage.
The two formulas
Gross yield is weekly rent times 52, divided by the purchase price, times 100. A house bought for $650,000 and rented at $560 a week brings in $29,120 a year, so the gross yield is about 4.48%.
Net yield takes that $29,120 and subtracts the costs the owner carries before dividing by the price. Council rates, the landlord share of water, landlord insurance, property management, a maintenance allowance, an allowance for vacancy, strata levies on a unit, and land tax where it applies. Mortgage interest and depreciation stay out of the net yield sum. Yield measures what the property earns. Interest is about how you funded it, and depreciation is a tax line, so both belong in the cash flow and tax conversation instead.
A worked example, with the assumptions shown
Here is the same house run through both formulas. Every cost below is an assumption I have picked for illustration, not a quote for any suburb. Your rates notice, insurance quote and management agreement replace these numbers on a real purchase.
| Line | Annual amount | Assumption |
|---|---|---|
| Rent | $29,120 | $560 a week, 52 weeks |
| Council rates | $1,900 | Illustrative |
| Water (landlord share) | $800 | Illustrative |
| Landlord insurance | $1,800 | Illustrative |
| Property management | $2,184 | Assumed 7.5% of rent |
| Maintenance allowance | $2,000 | Illustrative |
| Vacancy allowance | $1,120 | Two weeks of rent |
| Land tax | $0 | Assumed below threshold, check your holdings |
| Net income before interest | $19,316 | Rent minus the lines above |
| Gross yield | 4.48% | $29,120 divided by $650,000 |
| Net yield | 2.97% | $19,316 divided by $650,000 |
On these assumptions, about a third of the rent is gone before the bank sees a dollar. That gap moves with the property. A unit carries strata, so the gap is usually wider. An older house with deferred maintenance can blow the maintenance line out in year one. Land tax depends on your other holdings and the state, so the same property can carry a different net yield for two different owners.
Which rent and which price
The formula is only as good as the two numbers you feed it. The rent figure in a listing yield is usually the appraisal, and appraisals are often written at the top of the range to help the sale. I check rent against what comparable properties have actually leased for recently, not what is being asked, and I would rather run the model on the middle of the range than the top.
The price matters just as much. A yield quoted on the asking price is not your yield if you pay more. Some investors also run yield on the total acquisition cost, including stamp duty and buying costs, which makes it lower again. Either is fine. The mistake is comparing one property on asking price with another on all-in cost and calling it the same measure. Pick one basis and use it on every property on the shortlist.
Net yield is not cash flow
This is where most yield calculators stop and where the real decision starts. Net yield ignores the loan on purpose. Your weekly position does not.
Keep the same house and assume an 80% loan of $520,000 at an assumed 6.0% interest only. That is $31,200 a year in interest against $19,316 of net income, so the property runs about $11,900 a year negative before tax, or roughly $228 a week. A 4.48% gross yield sounded comfortable. The hold is a weekly contribution from your pay.
None of that makes the property a bad buy. A lower-yielding property in a stronger growth market can be the right call for the right investor. It just means the yield is the start of the cash flow model, not the answer to it. When I build a property due diligence checklist for a client, the rent check and the holding cost rebuild sit near the top for exactly this reason.
Why the gap matters more after 2027
Under the measures announced in the May 2026 Federal Budget, from 1 July 2027 rental losses on established residential investment properties purchased after 7:30pm on 12 May 2026 can no longer be deducted against your salary each year. They offset residential property income first and the rest carries forward. The measures remain subject to the passage of legislation.
In practice, that $228 a week in the example above would no longer be softened by a yearly refund on an established property bought after Budget night. You carry the full weekly number and the deduction waits in a pool, which carry-forward rental losses explains in plain English. That makes net yield and true weekly holding cost the numbers to model before you buy, not after. The wider picture on what changed sits in negative gearing changes 2027.
What a good rental yield looks like
There is no single good number, and I am wary of any page that gives you one. Yield and growth tend to trade against each other, and the right mix depends on your income, your other holdings and how long you plan to hold.
What I can show you is how wide the spread is inside one city. In buying investment property in Adelaide I compared three Adelaide house markets in the same June 2026 dataset: Blakeview at a gross yield of 3.59%, Mawson Lakes at 3.40% and Glandore at 2.47%. Same city, same property type, same month, more than a full percentage point apart. That is why I start with the brief and the cash flow you can carry, then look for the suburb, which is the order I set out in choosing an investment suburb.
Frequently asked questions
How do I calculate rental yield from weekly rent?
Multiply the weekly rent by 52 to get the annual rent, divide by the purchase price and multiply by 100. That gives you gross yield. For net yield, subtract the annual holding costs from the annual rent before you divide.
Should net rental yield include mortgage interest?
No. Net yield measures what the property earns after its own running costs, so interest and depreciation stay out. Interest belongs in your cash flow model, which is where the weekly cost of holding the property shows up.
Is gross or net yield better for comparing properties?
Gross yield is fine for a first screen because it is quick and every listing quotes it. Net yield is the one to use before you make an offer, because two properties with the same gross yield can carry very different strata, rates, insurance and maintenance.
What is a good rental yield in Australia?
It depends on the market and on what you need the property to do. Higher yields often come with lower growth expectations and the reverse is also common. In the June 2026 Adelaide data I published, gross house yields ranged from 2.47% to 3.59% across three suburbs, which shows how much the answer moves even inside one city.
Does rental yield matter more under the 2027 rules?
For established residential property bought after 7:30pm on 12 May 2026, it is likely to matter more, because from 1 July 2027 rental losses are expected to carry forward instead of reducing your tax each year, subject to the legislation passing. A thin net yield means a bigger weekly cost you carry yourself.
If you want to see how your next purchase holds up on net yield and true weekly cost, the Cash Flow Check is a free two-minute screen. For the full model on a real shortlist, book a strategy call and I will run it with you before you commit to anything.
Seek licensed professional advice specific to your situation before acting. This is general information only and does not consider your objectives, financial situation or needs. Worked example figures are illustrative assumptions only.
