Understanding Gross vs Net Rental Yield — A Clear Yield Explainer
Gross vs net rental yield in Australia explained: the formulas, a worked example, and why the gap between them decides if a property earns or bleeds.
Gross yield is the number agents quote. Net yield is the number that actually lands in your account. The gap between them decides whether a property earns or bleeds.
Both matter, but only one tells you the truth about cashflow.
What gross rental yield means
Gross rental yield is annual rent as a percentage of the property's value. It ignores costs entirely.
The formula is simple. Annual rent, divided by property value, times 100.
A property renting at $600 a week earns $31,200 a year. On a $650,000 value, that is a gross yield of 4.8%.
It is useful for a quick comparison. It is useless for working out what you actually keep.
What net rental yield means
Net rental yield strips out the cost of holding the property. It is the figure that reflects real income.
The formula adds a step. Annual rent minus annual costs, divided by property value, times 100.
Those costs add up fast: council rates, water, insurance, property management, repairs, strata where it applies, and vacancy between tenants.
The number: On the same $650,000 property, $9,000 of annual holding costs cuts the yield from 4.8% gross to about 3.4% net. That 1.4 percentage point gap is the difference between the headline and reality.
Why the gap matters
The gap is where investors get caught out. A strong gross yield can mask a property that barely breaks even.
It varies by property type. Apartments with high strata fees often show a wide gross-to-net gap, while houses can be narrower.
Net yield is also only the start. Add a mortgage, and cashflow, not yield, becomes the number that decides whether you can hold.
The bottom line
Gross yield gets you in the door, but net yield tells you whether the deal is worth walking through it. Always run the net figure before you buy, and never judge a property on the agent's headline number alone. Clear Yield calculates both gross and net yield automatically for every property in your portfolio, so the real number is always one click away.