Gross yield is annual rent as a percentage of purchase price. How to calculate it, and why it overstates your actual return.
Gross yield is the annual rental income of a property expressed as a percentage of its purchase price, before any expenses are deducted.
Gross yield \= (weekly rent × 52\) ÷ purchase price × 100
A property in Whanganui at $479,000 renting for $590 a week:
$590 × 52 \= $30,680 annual rent $30,680 ÷ $479,000 \= 0.064 Gross yield \= 6.4%
It is fast, requires only two numbers, and makes properties comparable at a glance. It is the standard first-pass filter when scanning listings.
Gross yield is not your return. It ignores rates, insurance, property management, maintenance, body corporate levies, vacancy and — critically — mortgage interest. A 6.4% gross yield property can still be cashflow negative.
Some investors calculate gross yield against current valuation rather than purchase price. Both are valid, but they answer different questions and are not comparable. Be explicit about which you are using.
Last reviewed: 1 August 2026 · ---
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