Question 1

What is a good rental yield in Australia?

Accepted Answer

In Australia, a gross rental yield of 3-5% is considered average, 5-7% is good, and above 7% is high yield. Capital city properties typically return 3-4% gross yield, while regional areas can exceed 6-8%. A higher yield doesn't always mean a better investment — high-yield properties may have lower capital growth prospects, higher vacancy rates, or be in areas with limited demand. Most investors aim for a balance between rental yield and long-term capital growth.

Question 2

What's the difference between gross and net rental yield?

Accepted Answer

Gross rental yield is calculated by dividing annual rental income by the property purchase price — it gives a quick snapshot but doesn't account for costs. Net rental yield deducts annual expenses (council rates, insurance, maintenance, strata fees, property management fees) from the rental income before dividing by the purchase price. Net yield gives a more accurate picture of your actual return. For example, a property with 5% gross yield might only return 3-3.5% net yield after expenses.

Question 3

What expenses reduce net rental yield?

Accepted Answer

Common expenses that reduce net rental yield include: council rates ($1,500-$3,000/year), landlord insurance ($1,000-$2,000/year), property management fees (7-10% of rent), maintenance and repairs (budget 1% of property value per year), strata/body corporate fees ($2,000-$6,000/year for units), water rates, and advertising costs for tenant turnover. Mortgage interest is typically excluded from yield calculations as it relates to your financing, not the property's performance.

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