How do I calculate Yield? Gross Yield vs Net Yield

In property investment, there are 2 main types of yield. Net Yield and Gross Yield.

Gross Yield

Gross yield is what you earn from the rental returns vs what you paid for the property. It is calculated using:

Gross Yield: (Weekly rental x 52) / (the price of the property) x 100

Net Yield

Net yield is what you earn from the rental returns, less all expenses (such as council rates, water rates, property management fees, body corporate fees, etc) vs what you paid for the property. It is calculated using:

Net Yield: (Weekly rental x 52 - expenses) / (the price of the property) x 100

Every property and every investor is different. The gross yield and net yield will be different for different property and investor. Some investors may include renovation costs and/or maintenance costs into yield calculations.

As you might have already realise, the yield will be different over the years, as rent and rates tend to increase over time, while maintenance costs would vary from one year to another.

Generally, the yield improves over time, as rent rises but your purchase cost remains unchanged. IE, the longer you hold the property, the better the yield.

Yield is just one factor in property investing. Every property and investor is different. As buyers agents, our advocates look at other indicators and numbers, such as growth, potential, vacancy rates, etc, to determine if a property is suitable for our property buying client.