Rental yield is the first number most investors reach for and the one most often worked out wrong. It is simple arithmetic — annual rent measured against what the property is worth — but the version people quote is almost always the gross figure, calculated on the purchase price they paid years ago, with none of the running costs taken out. That number flatters every property ever bought.
If you want the figure your accountant would recognise, you need two: gross yield for a quick comparison between properties, and net yield for what the asset actually does for you. Our rental yield calculator works out both in about thirty seconds. This guide explains what it is doing, and what to put into it so the answer is worth having.
What rental yield actually measures
Rental yield is the income return on a property, expressed as a percentage of its value. It answers one question: for every dollar tied up in this property, how many cents of rent come back each year?
It is deliberately a percentage, because that is what makes properties comparable. A house renting at $560 a week and a unit renting at $380 a week tell you nothing side by side until you put each one against what it costs. Yield is also what lets you compare a property against anything else you could do with the same money.
What yield does not measure is total return. A property can have a modest yield and still be the best-performing asset you own, because the other half of the return — capital growth — is not in the formula at all. More on that below.
Gross rental yield: the quick number
Gross yield is rent against value, with nothing taken out:
Gross yield % = (weekly rent × 52) ÷ property value × 100
Take a property worth $650,000 renting at $580 a week. Annual rent is $580 × 52 = $30,160. Divided by $650,000 that is 0.0464, or a gross yield of 4.64%.
Gross yield is useful for one thing: screening. It is fast, it needs only two inputs, and it lets you put ten listings in a spreadsheet and see which are worth a closer look. It is not useful for deciding whether a property is paying its way, because it ignores every cost of owning it.
Net rental yield: the number that matters
Net yield takes the costs out:
Net yield % = (annual rent − annual expenses) ÷ total property cost × 100
Two details separate a real answer from a comfortable one.
Use the current value, not what you paid. If you bought in 2018 and calculate on the 2018 price, your yield will look excellent — but it is describing a decision you made years ago, not the money sitting in the property today. The honest question is whether the capital currently tied up in the property is earning its keep at today's value. If you are buying rather than reviewing, use the purchase price plus stamp duty, conveyancing and any immediate works, because that is what the property truly cost you.
Count every expense, including the ones that never arrive as a monthly bill. The costs owners routinely forget are the ones that do the damage.
The costs to include for a South Australian property
- Council rates — varies by council and by property value.
- SA Water supply and sewerage charges — the owner is liable for the supply charges; water usage can be passed on to the tenant where the property is separately metered and the agreement provides for it.
- Emergency Services Levy — an annual state charge on the property.
- Building insurance and landlord insurance — two separate covers. Landlord insurance is the one that responds to loss of rent and tenant damage.
- Property management fees — the ongoing management percentage, the letting fee each time a new tenant is placed, and whatever else sits in the schedule. Our guide to property management fees in Adelaide explains what each line is for.
- Repairs and maintenance — a genuine allowance, not last year's total if last year happened to be quiet.
- Strata or community corporation fees — for units, townhouses and anything community titled.
- Land tax — applies to investment land in South Australia above the threshold, assessed on site value and aggregated across everything you own.
- A vacancy allowance — the single most commonly omitted cost. See below.
Mortgage interest is deliberately not on that list. Yield measures how the property performs, independently of how you financed it, which is why two investors with different loans get the same yield on the same property. Interest belongs in a cash-flow calculation — a different and equally worthwhile exercise.
A worked example
The same $650,000 property at $580 a week, with a realistic set of costs:
- Annual rent (52 weeks): $30,160
- Council rates: $1,900
- SA Water supply and sewer: $800
- Emergency Services Levy: $180
- Building and landlord insurance: $1,500
- Management at 7.7% of rent collected: $2,322
- Letting fee, averaged over a two-year tenancy: $300
- Repairs and maintenance allowance: $1,800
- Vacancy allowance, two weeks: $1,160
Total costs: $9,962. Net income: $30,160 − $9,962 = $20,198. Against $650,000 that is a net yield of 3.11%, from a gross figure of 4.64%.
That gap of roughly a third is the point of the exercise. It is not a bad result; it is simply the real one. Every property's numbers are different, which is why it is worth putting your own into the yield calculator rather than working from a rule of thumb.
Yield is only half the return
An investment property pays you in two currencies: rent now and growth later. Yield counts only the first.
That matters because the two tend to pull against each other. Properties in established, tightly held suburbs generally command higher prices relative to their rents, which shows up as a lower yield — and those are often the same suburbs with the strongest long-run growth. Smaller dwellings and homes further from the city usually show higher yields, because the price base is lower, and sometimes come with slower capital growth. Neither is the right answer on its own. What matters is which of the two returns your strategy needs, and whether you can fund the holding costs while you wait for the other.
A property on a 3.1% net yield with steady growth can comfortably out-perform one on 5.5% with a flat price line. Yield tells you whether you can afford to hold it. Growth tells you whether holding it was worth doing.
Five things that quietly erode yield
- Rent that has not moved. A property let $30 a week below market gives up $1,560 a year, and the gap usually widens rather than closes. In South Australia rent can generally be increased only once in any twelve-month period, and written notice is required well ahead of time — so a review missed is a year lost.
- Vacancy. Four weeks empty costs roughly 7.7% of a year's rent, which is more than most owners pay in management fees for the entire year. Overlapping the notice period with the marketing campaign is one of the highest-value things a manager does.
- Slow maintenance. Small repairs left alone become large ones, and they are a leading reason good tenants give notice. Re-letting costs far more than the tap washer did.
- Arrears allowed to run. Rent collected at 97% instead of 100% is three per cent off the top, before any tribunal costs.
- A fee schedule you have never read. Not the headline percentage — the lines underneath it. Owners are regularly surprised by what sits below the advertised rate.
How to lift the yield on a property you already own
You cannot change what you paid, so improving yield means raising net income or adding value. The realistic levers:
Review the rent against achieved lettings, not the asking rents still sitting on the portals. Properties that stay advertised are usually the ones priced wrong. A rental appraisal gives you the figures properties actually let for.
Spend where tenants pay for it. Heating and cooling, secure off-street parking, a functional kitchen and anything that lowers the tenant's own running costs tend to return their cost in rent. Cosmetic work that photographs well but changes nothing about living there usually does not.
Shorten vacancy. Start marketing the moment notice is given, photograph the property properly, and price it to let in the first fortnight rather than holding out for an extra $10 a week across six empty weeks.
Keep the tenant you have. Every renewal avoids a letting fee, a vacancy and a re-marketing campaign. Being responsive is cheaper than re-letting.
Check what your management is actually delivering on arrears, inspections, rent reviews and vacancy. A fee is only expensive if the work behind it is not being done. Our comparison of self-managing versus professional management sets out where the money goes, and maximising rental returns covers the rest.
Common mistakes when calculating yield
- Using 52 weeks of rent with no vacancy allowance. Almost no property is let for 52 weeks every year, forever.
- Calculating on the purchase price years after buying. It measures a past decision, not a current one.
- Leaving out purchase costs. Stamp duty and conveyancing are part of what the property cost you.
- Using advertised rents instead of achieved rents. The two are not the same, particularly in a moving market.
- Comparing someone else's gross yield with your net. Check that both figures are the same kind of number before drawing a conclusion.
Frequently asked questions
What is a good rental yield in Adelaide?
There is no single figure, because yield trades off against growth. Established inner suburbs typically show lower yields with stronger long-term price movement; outer suburbs and smaller dwellings typically show higher yields. The more useful test is whether the property's net yield covers its holding costs at your level of borrowing, and whether the growth prospects justify holding it. Run your own numbers through the calculator and compare like with like.
Should I use gross or net rental yield?
Gross for screening a shortlist quickly, net for any decision that involves money. Net yield reflects what the property actually returns after the costs of owning it.
Does rental yield include mortgage repayments?
No. Yield measures the property's performance regardless of how it is financed. Interest belongs in a cash-flow or return-on-equity calculation.
How often should I recalculate rental yield?
Once a year is sensible — alongside the rent review and the insurance renewal — and again whenever the property's value moves materially or a major cost changes.
Work out your own number
The Wemark rental yield calculator is free, takes weekly rent and property value, and returns gross and net yield with the annual figures behind them. If you would rather have the rent figure checked by someone letting properties in your suburb this month, book a rental appraisal below — we will tell you what the property should achieve and what it will cost to hold, so you can put real numbers into the calculation instead of estimates.