Rental Yield: How to Calculate Gross and Net Yield

What is rental yield?

Rental yield is the rent a property earns in a year, shown as a percentage of its price or value. Gross yield uses rent alone. Net yield takes out the costs of owning and renting it. Investors use it to compare properties of different prices. Under Rent-to-Sell™, your cashflow also includes an additional 50% extra cashflow on top of your normal market rent.

Yield measures income only. It leaves out capital growth, your loan and tax, so it shows how hard the property works each year rather than your total return.

How to calculate rental yield

Multiply the weekly rent by 52, divide by the property price and multiply by 100. That is gross rental yield. For net rental yield, take yearly running costs and vacancy off the rent first. Use the purchase price for a property you are buying and a current valuation for one you own.

Gross rental yield: worked example

Take a $600,000 house that rents for $540 a week.

1. Annual rent: $540 × 52 = $28,080.
2. Divide by the price: $28,080 ÷ $600,000 = 0.0468.
3. Multiply by 100: gross rental yield is 4.7%.

Net rental yield: worked example

The yearly running costs below are illustrative estimates for a house at this price, not quotes. Swap in your own bills.

1. Rent after vacancy: $28,080 − $1,080 = $27,000.
2. Less running costs: $27,000 − $7,800 = $19,200.
3. $19,200 ÷ $600,000 × 100: net rental yield is 3.2%.

Gross vs net rental yield

Gross yield is rent alone. Net yield is what is left after the costs of owning the property. Gross yield is quick for screening properties; net yield is the one to decide on. Two houses with the same gross yield can be far apart once strata, insurance, land tax and vacancy come out. On the example house, 4.7% gross becomes 3.2% net.

• Agent and listing yields are usually gross and measured on the asking price. Recalculate them on the price you would pay.
• Suburb averages mix houses and units, and old and new homes, so compare like with like.
• For a property you already own, use a current valuation. A purchase price from years ago makes the yield look better than it is.
• A figure that includes anything besides rent, such as Rent-to-Sell's extra 50%, is a cashflow yield. Compare it with other cashflow yields, not with rental yield.

What is a good rental yield in Australia?

There is no single good number, but the national average is a useful yardstick. Cotality's Home Value Index put the national gross yield at 3.85% at 30 September 2026, the highest since August 2019. Houses averaged 3.6% and units 4.7%. A gross yield above the average for your area and property type is doing better than most.

Yields are rising because values have fallen for six months in a row, to 5.2% below the March peak, while rents have kept growing more slowly. Cotality's September quarter rental review warns that a higher gross yield rarely means positive cash flow: new investor loans average in the mid-to-high 6% range, and insurance, maintenance and rates have all gone up.

Higher yields come with trade-offs. Cheaper areas and units often yield more but have historically grown more slowly in value, and a very high yield can point to higher vacancy or upkeep.

Rental yield under Rent-to-Sell

Rent-to-Sell gives you an additional 50% extra cash flow on top of your normal market rent, set at 50% of Year 1 rent and paid every week for up to 8 years. The rent itself stays at market, so your rental yield is unchanged. However your cashflow yield rises significantly: on the $600,000 example, Year 1 cash collected goes from 4.7% to 7.0% of the price, which may be enough to turn your property cash flow positive, even if you're only putting down a 20% deposit.

In a soft market, Rent-to-Sell lifts your cashflow from the first week and locks in a profitable exit strategy. Each year from 4 to 8 has a contracted minimum price, and when the tenant buyer buys you receive that price or an independent valuation, whichever is higher.

How the 50% works

• The extra is 50% of the Year 1 weekly rent. On $540 a week that is $270 a week, so the tenant buyer pays $810 a week in total.
• It stays at the same dollar amount for up to 8 years, or until the tenant buyer buys, whichever comes first.
• The tenant buyer pays it into PublicSquare's trust account each week, and it is paid to you monthly with the rent.
• Under the contract it is an interest-free loan from the tenant buyer to you. When they buy in years 4 to 8, it is credited to their deposit and deducted from the final sale price.
• If the tenant buyer walks away, the payments become an exit fee you keep, and PublicSquare finds a new tenant buyer on a new Rent-to-Sell term free of charge.
• Rent is reviewed once a year and can rise by up to 4%. The extra does not change when the rent does.

The tenant buyer pays the extra because they are buying the home they live in, and every payment builds their deposit.

On those assumptions the standard lease costs about $230 a week to hold, while Rent-to-Sell covers its interest with $3,120 a year to spare. It stays positive until the interest rate passes about 7.15%. The 6.5% comes from the RBA's lending rates table (F6); your own rate, deposit and costs will differ.

Rental yield in later years

The extra stays at $270 a week, or 2.3% of the $600,000 price, every year. The rent underneath it can rise. If it rose by the full 4% at each of the four reviews to Year 5, rent would be about $632 a week and cash collected about $46,890, or 7.8% of the price.

The extra would then be about 43% of that year's rent rather than 50%, because it is set at half the Year 1 rent. If the rent stays flat, it stays at exactly 50%.

Is the extra 50% rental income?

Under the contract it is an interest-free loan from the tenant buyer, not rent, which is why PublicSquare reports the combined figure as cashflow yield. How it is taxed depends on your circumstances, so check with your accountant. The ATO lists the rental expenses landlords can claim.

How to increase rental yield

Rental yield rises when the income goes up or the costs come down. The rent comes first, then vacancy, management fees and insurance.

• A rent below market lowers your yield every week. Rent can rise only once every 12 months in Queensland and New South Wales, and a rental appraisal shows the current market rent.
• Two weeks of vacancy a year costs 0.2% of yield on the $600,000 example. A long lease with one tenant removes the gap.
• Insurance premiums and management fees vary between providers and are worth comparing each year.
• Rent-to-Sell adds 50% of Year 1 rent on top of market rent, lifting Year 1 cashflow yield on the example from 4.7% to 7.0%. It is one of several high-cashflow property strategies.

How to check a rental yield figure

Most advertised yields are gross, measured on the asking price, with no allowance for vacancy. Before comparing one property with another, find out:

1. Whether the figure is gross or net, and which costs come out.
2. Whether it uses the purchase price, the asking price or a current valuation.
3. How many weeks of vacancy it allows for.
4. Whether the rent is current market rent or an agent's estimate.
5. Whether it includes anything besides rent, and whether that amount is fixed or reviewed.
6. What the property costs to hold after interest, and whether you could cover it if rates rise.
7. Under Rent-to-Sell, the contracted minimum price for each year from 4 to 8, which the minimum resale price calculator works out for your property.

When Rent-to-Sell is not the right fit

Rent-to-Sell suits landlords who want stronger cash flow now and a defined sale in years 4 to 8. It does not suit an owner who plans to hold for decades or wants to pick the sale date; a traditional lease keeps both open.

• The tenant buyer holds an option to buy between years 4 and 8, so the property is not a long-term hold.
• The extra 50% is credited to the tenant buyer's deposit when they buy. It brings cash forward rather than adding to the sale price.
• Rent rises are capped at 4% a year during the term.
• Eligibility depends on the property, its location and its current tenancy. Appraisals cover Queensland and New South Wales.

Written by

Dean Arnold

Founder & CEO

Licensed real estate agent

I started PublicSquare in 2021 to give homebuyers a real path to ownership without a deposit, and investors a stronger-cashflow alternative to a standard rental. I hold real estate licences in Queensland and New South Wales and personally review every property that enters the program.

Reviewed by

Jarrod Wills

Property Lead

Licensed agent · Former mortgage broker

I was a mortgage broker before joining PublicSquare, so I look at every property and every purchase the way a lender would. I now lead the property side of the program, helping homebuyers from their first info session through to move-in, and working with our buyers agency team on each acquisition for our investors.

Read more about Rent-to-Sell.

This article is general information only and does not take your personal circumstances into account. PublicSquare is a licensed real estate agency, not a financial adviser or credit provider. Consider seeking independent advice before making a decision.