Rental Returns: Yields

The yield on an investment property details the future income you can expect to make represented as a percentage on an annual basis.

Key Terminology

• Real Estate Yield — Measures future income as an annual percentage based on asset cost or market value.
• Gross Rental Yield — Annual income before expense deductions.
• Net Rental Yield — Annual income after subtracting expenses like maintenance, repairs, and insurance.
• Return — Total gain or loss over the holding period, including capital appreciation.

How to Calculate Net Rental Yield

Subtract annual expenses from annual rental income (weekly rent × 52), divide by the property value, then multiply by 100.

Example

A $400,000 property rented at $350/week with $2,500 annual expenses:

($18,200 − $2,500) ÷ $400,000 × 100 = 3.93% net rental yield

Appropriate yields depend on your individual financial goals and risk tolerance. We recommend consulting qualified professionals before making investment decisions.

This article does not constitute financial or legal advice.