Net yield is the rental return on a property after all operating expenses have been subtracted. Unlike gross yield, which only looks at income versus property value, net yield gives you a realistic picture of what the property actually earns.
How to Calculate Net Yield
The formula is:
Net yield = ((annual rental income - annual expenses) / property value) x 100
If your property earns $30,000 per year in rent and your annual expenses (management fees, insurance, rates, maintenance, strata levies) total $10,000, your net income is $20,000. If the property is worth $600,000, your net yield is 3.3%.
Compare that to the gross yield of 5.0% using the same numbers. The gap between gross and net yield shows the real impact of ownership costs.
What Expenses Are Included
Net yield calculations typically include all recurring property costs:
- Property management fees
- Council rates and water rates
- Landlord and building insurance
- Strata levies (for units and apartments)
- Repairs and maintenance (averaged over time)
- Land tax (if applicable)
- Vacancy allowance (a percentage of expected vacancy)
Mortgage interest is usually excluded from net yield calculations because it varies based on your loan structure and deposit size, not the property itself. This makes net yield a useful comparison tool regardless of how the property is financed.
Why Net Yield Matters More Than Gross
Two properties might both have a gross yield of 5%. But if one is a house with low outgoings of $5,000 per year and the other is an apartment with strata levies, higher insurance, and body corporate fees totalling $12,000 per year, their net yields will be very different. Net yield reveals which property actually puts more money in your pocket.
Why It Matters for Landlords
Net yield is the more honest number. It shows you what a property actually earns after the costs of ownership, and it is the number that directly affects your cash flow. Tracking your real expenses throughout the year makes your net yield calculation accurate rather than an estimate. For a full breakdown of ownership costs, see our guide to how much it costs to own a rental property.
propkt calculates your actual net yield automatically based on the income and expenses you record. For a quick estimate, use our rental yield calculator.