Gross yield is the simplest measure of a property's income return. It takes the total annual rental income and expresses it as a percentage of the property's value, without subtracting any expenses. It gives you a quick, top-level comparison between properties, but it does not tell the full story.
How to Calculate Gross Yield
The formula is straightforward:
Gross yield = (annual rental income / property value) x 100
If your property earns $500 per week in rent, that is $26,000 per year. If the property is valued at $520,000, the gross yield is 5.0%.
Where You See Gross Yield
Gross yield is the number most commonly used in property listings, market reports, and suburb comparison tools. When a real estate agent or research report says a suburb has a "yield of 4.5%," they almost always mean gross yield.
This is because gross yield is easy to calculate; you only need the rent and the price. Net yield requires knowing the actual expenses, which vary from property to property and owner to owner.
Limitations of Gross Yield
Gross yield ignores all the costs of ownership: property management fees (typically 5% to 10% of rent), council and water rates, insurance, maintenance, strata levies, and land tax. Two properties with the same gross yield can have very different net returns if one has significantly higher costs.
A high gross yield on paper can look much less attractive once you factor in the real expenses. Always look at net yield when making investment decisions. For a fuller breakdown of ownership costs, see our guide to how much it costs to own a rental property.
Why It Matters for Landlords
Gross yield is useful as a first-pass filter when comparing properties or suburbs. It tells you quickly whether a property is in the ballpark of what you are looking for. But it should not be the final number you rely on. Always calculate net yield for the full picture.
propkt shows both gross and net yield for your properties based on actual income and expense data. For a quick comparison, use our rental yield calculator.