Gross yield vs net yield
Gross yield: Annual rent ÷ property price × 100. A $600,000 property earning $550/week = $28,600/year. Gross yield = 4.77%.
Net yield deducts all costs: property management (7-12% of rent), vacancy allowance (~2 weeks), maintenance (1% of value), council rates, and insurance. Net yield typically falls to approximately 2.3–2.8% for the same property.
What counts as a good rental yield?
- Below 3.5% gross: Weak — inner-city apartments or premium suburbs
- 3.5–5% gross: Average — established houses in suburban markets
- 5–7% gross: Strong — regional cities or outer suburban areas
- Above 7% gross: Very high — often regional with higher vacancy risk
Typical rental yields by city (2025)
- Sydney: 3.0–3.8% (houses), 3.5–4.5% (units)
- Melbourne: 3.2–4.0% (houses), 3.8–4.8% (units)
- Brisbane: 4.0–5.0%
- Perth: 5.0–6.5% — one of the highest-yielding capital cities
- Adelaide: 4.5–5.5%
- Regional cities: 6–8%+
The cash-on-cash return
Net yield measures return on the full property price. Cash-on-cash return measures net operating income as a percentage of actual cash invested (your deposit). A property with 2.5% net yield purchased with a 20% deposit delivers a cash-on-cash return of 12.5% on your equity before accounting for mortgage payments.