Net rental yield
Annual rent minus running costs, as a percentage of the property's price.
- Net yield = (annual rent minus costs) divided by price, times 100
- Includes rates, insurance, strata, management and maintenance
- Usually excludes loan interest
How it works
Subtract the property's annual running costs from the annual rent, then divide by the price.
Why it matters
Two properties with the same gross yield can have very different net yields, especially where strata levies are high.
Rent of $28,600 a year less $7,000 of costs leaves $21,600. On a $600,000 price, the net yield is 3.6%.
Illustrative only. Figures are examples, not a forecast or recommendation.
Net yield is the honest number. Rothmore uses it, not gross yield, when comparing properties.
Common questions
Does net yield include interest?
Usually not, so it can be compared regardless of how the purchase is financed.
What costs should I include?
Rates, water, insurance, strata, management, maintenance and an allowance for vacancy.
Related terms
Sources
General information only. It does not consider your objectives, financial situation or needs, and is not financial, credit, tax or legal advice. Rules change, so check current law and get advice from a licensed professional before acting.