What's Your Investment Property Actually Returning? Gross Yield Flatters. Net Yield Tells the Truth.

Rental Yield Calculator

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How this Rental Yield Calculator works

Gross rental yield

Gross rental yield is the simplest measure of investment property performance: annual rent ÷ purchase price × 100. If a property costs $650,000 and rents for $550 per week ($28,600 per year), the gross yield is 4.40%. That number is straightforward to calculate and easy to quote — which is exactly why it appears in every listing, market report and real estate agent presentation. It takes no account of what it costs to own and operate the property.

Net rental yield

Net rental yield corrects for that omission: (annual rent minus all annual ownership costs) ÷ purchase price × 100. Annual ownership costs include property management fees, vacancy allowance, council rates, water rates, landlord insurance, maintenance, body corporate fees where applicable, and any other recurring costs. For a typical Australian residential investment property, the gap between gross and net yield is 1.5–2.5 percentage points. A property advertised at 5.5% gross yield may produce 3.0–3.5% net yield once real costs are included. This calculator applies a 4% vacancy rate by default (about 2 weeks per year) and an 8.5% management fee — both adjustable to match your property and market.

Cash-on-cash return

Cash-on-cash return measures the return on the actual cash you have deployed. If you purchase an $800,000 investment property with a 20% deposit ($160,000) and finance the remainder at 6.5% p.a. interest only, your annual mortgage repayment is approximately $41,600. If your net property income after running costs is $22,000, your annual cash flow is negative $19,600 — and your cash-on-cash return is negative 12.25% on your $160,000 deposit. That is the number that tells you what your equity is actually earning relative to other uses of that capital.

Positive vs negative gearing

Positive vs negative gearing describes whether your rental income exceeds or falls short of all property costs including mortgage repayments. A positively geared property generates net cash flow; a negatively geared property costs you money each year. Negative gearing is extremely common in Australian capital cities and is often a deliberate strategy — the annual shortfall may be tax-deductible, and the investment thesis is built on expected capital growth rather than income. The calculator flags gearing status automatically and shows the cash flow figure in absolute dollars, so the cost of a negative gearing position is explicit rather than implied.

How to interpret your results

• Gross yield is marketing; net yield is reality — the difference is typically 1.5–2.5 percentage points for a standard residential property. Headline yields in listings and market reports are almost always gross. Net yield is what you should be comparing between properties and against your mortgage rate.
• Cash-on-cash return tells you what your deposit is actually earning — a net yield of 3.5% on a $1M property financed 80% at 6.5% interest only produces an annual interest bill of $52,000 against a net property income well below that figure. The cash-on-cash return on your $200,000 deposit in that scenario is sharply negative — the honest comparison to make against other uses of your capital.
• Negative gearing means the property costs you money each year — that shortfall may still be a sound strategy if capital growth is expected and tax deductibility is factored in. But it needs to be a deliberate choice modelled in advance, not a surprise discovered at tax time.
• Vacancy rate has a bigger impact than most investors expect — at 8.5% management fee and 4% vacancy, you are already losing 12.5% of gross rent before a single dollar of rates, insurance or maintenance is counted. Investors who model 0% vacancy systematically overestimate their yield.
• Yield and capital growth tend to trade off — high-yield properties (typically regional, high-density or outer-suburban) often show lower capital growth. Low-yield properties (typically inner-city, prestige and land-rich) tend to show stronger capital growth. Knowing which outcome you are seeking determines whether yield optimisation is the right framework for your decision.

How to improve your rental yield

• Use 4% vacancy as your default, not 0%. Even a well-managed property will have 1–2 weeks of vacancy per year between tenancies. For regional or lower-demand markets, consider 6–8%.
• Get actual council rates and strata fees before you buy. A strata levy of $6,000/yr versus $1,200/yr on otherwise identical units shifts net yield by 1.2 percentage points on a $400,000 property. These are the most underestimated line items in investment analysis — and the easiest to verify before exchange.
• Compare net yield directly to your mortgage rate. If your net yield is below your interest rate, your property is negatively geared regardless of what gross yield says. A 3.2% net yield against a 6.5% rate means you are paying 3.3% per year in net interest cost on the loan balance, funded out of other income.
• Property management fees range 6–12% by market. Inner-city metro is often 6–8%; regional can be 10–12%. Using the metro default for a regional property will overstate your net yield.
• Model cash-on-cash return alongside yield. A 4.2% net yield on an $800,000 property at 80% LVR / 6.5% interest only produces ~$41,600 annual interest cost against net rental income below that figure — meaning the cash-on-cash return on the $160,000 deposit is negative.
• Review your yield annually, not just at purchase. Rising rents, rising values, or rising costs all change the yield. A property that yielded 4.8% net at purchase may yield 5.5% three years later if rents have grown substantially. Important for hold-vs-sell and refinancing reviews.

Example Rental Yield Calculations in Australia

The table below shows gross and net rental yield outcomes for four property types using a 4% vacancy rate, 8.5% management fee, $1,800 council rates, $900 water, $1,500 insurance and 0.5% of value in maintenance.

Calculator assumptions

Rental yield calculations produced by this calculator are estimates based on figures you enter. They are intended as a planning and comparison tool, not as financial advice or a guarantee of actual returns. Vacancy rate, property management fee, and maintenance defaults are indicative averages for Australian residential investment properties as at May 2026. Actual costs vary by property type, location, property manager and building condition. Strata and body corporate fees are optional inputs and will not be included unless you enter them. Annual cash flow and cash-on-cash return calculations are based on the loan details you enter; they do not account for tax deductibility of interest, depreciation deductions, or capital gains tax. The tax treatment of investment property income and expenses is general information only and does not constitute tax advice — speak to a registered tax agent or accountant before making investment decisions. All figures in AUD. LoanGorilla compares investment property loans from 100+ Australian lenders. Reviewed by the LoanGorilla editorial team — last updated May 2026.