Net yield

Net yield is a property's annual rental income minus its ownership costs, expressed as a percentage of the purchase price.

The calculation

Net yield \= (annual rent − annual expenses) ÷ purchase price × 100

What to include in expenses

Rates, insurance, property management fees, a realistic provision for repairs and maintenance, body corporate levies, accounting, and an allowance for vacancy.

Worked example

Same $479,000 Whanganui property at $590/week — $30,680 gross.

Rates $2,900 · Insurance $1,800 · Management (8%) $2,454 · Maintenance provision $2,000 · Vacancy allowance (2 weeks) $1,180 \= $10,334

$30,680 − $10,334 \= $20,346 $20,346 ÷ $479,000 \= 4.2% net yield

Gross said 6.4%. Net says 4.2%. That gap is the number most first-time investors miss.

Common misunderstanding

Net yield usually excludes mortgage interest, because it measures the property's performance rather than your financing of it. That makes properties comparable regardless of how they're funded — but it means net yield still isn't your cashflow. Interest comes off after.

There is no single agreed definition of what belongs in "expenses," so net yields from different sources may not be comparable. Check the assumptions.

Related terms

Last reviewed: 1 August 2026 · ---

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