Gross Rental Yield
Net Rental Yield
Gross vs Net Gap
That is a significant difference from the 4.92% gross yield. This is why experienced investors always look at net yield before making a decision.
Regional Yield Patterns
- Regional areas consistently deliver higher yields than capital cities, often 1-2 percentage points more.
- Units typically yield more than houses because they are cheaper relative to the rent they generate.
- Perth and Darwin have led yield performance for several years, driven by population growth and mining sector demand.
- Sydney and Melbourne remain the lowest-yielding capital city markets, though they historically deliver stronger capital growth.
Yield Quality Guide
- Below 3%: Low yield. You are relying heavily on capital growth and likely funding a significant shortfall each week (negative gearing).
- 3% - 4%: Moderate. Typical for capital city houses in Sydney and Melbourne.
- 4% - 5%: Solid. A healthy balance for many investors.
- 5% - 7%: Strong yield. Common in regional centres and mining towns.
- Above 7%: Very high yield. Investigate carefully — high yields sometimes signal higher risk, low capital growth potential, or a declining market.
Vacancy Allowance
No property is rented 52 weeks a year, every year. Even well-located properties experience vacancy between tenants. Allow at least 2-4 weeks per year in your calculations.
Yield Trap
A property yielding 8% in a declining regional town may underperform a 3.5%-yielding property in a growth suburb over a 10-year period. Yield is only half the equation.
Balanced Strategy
Most successful investors aim for a balance. A property that delivers moderate yield (4-5%) in an area with solid growth fundamentals (infrastructure spending, population growth, constrained supply) often outperforms properties that excel at one metric but fail at the other.
Rent Conversion
Always convert to annual figures for accuracy. Multiply weekly rent by 52 (not by 4 and then by 12, which gives you only 48 weeks).
