Yield is the most quoted number in property and the least reliable one. It is a starting filter, not a conclusion — and the version of yield being quoted usually leaves out the two things that matter most: vacancy and expenses.
Gross yield
Gross yield is annual contracted rent divided by purchase price. A $650-a-week rent on a $900,000 property is a 3.76% gross yield ($33,800 ÷ $900,000). It assumes 52 weeks of rent and ignores every cost of ownership.
Effective yield
Effective yield adjusts for vacancy: annual rent actually collected, divided by purchase price. At 50 occupied weeks instead of 52, the same property shows a 3.61% effective yield ($32,500 ÷ $900,000). Two properties with identical "gross yields" can have very different effective yields if one sits empty.
Net yield
Net yield goes further and subtracts the running costs — rates, insurance, management, repairs — before dividing by price. It is the closest to a cash return on the purchase price, but it still ignores the two biggest items in most investment property equations: interest and tax.
Why a headline yield can hide a weak property
A high gross yield usually means a lower purchase price per dollar of rent — often an older, higher-maintenance property in a weaker rental market. A low yield on a high-growth suburb can still be the rational choice if the investor is banking on capital growth. Neither is "right". Yield is one input to the cash-flow question, and cash flow is one input to the whole-equation question this site exists to answer.
The numbers that matter more than yield
- Weekly contribution — what the property takes from your pocket after rent and tax
- Taxable loss — the number the tax effect is based on
- Occupied weeks — the difference between advertised rent and collected rent
- Cash buffer — how many months of stress the structure can absorb
A worked comparison
| Metric | Property A | Property B |
| Purchase price | $900,000 | $650,000 |
| Weekly rent | $650 | $620 |
| Gross yield | 3.76% | 4.96% |
| Occupied weeks | 50 | 46 |
| Effective yield | 3.61% | 4.39% |
| Management, rates, insurance, repairs | $9,600 | $11,500 |
| Net yield | 2.54% | 2.62% |
Illustrative. The higher-yield property's advantage largely disappears once vacancy and expenses are counted — which is the point.
Yield answers "what rent does the price buy?". It does not answer "can I hold this property?". Use the calculator for the second question.