Understanding Rental Yield.
Rental yield is a measure of how much income a property generates compared to its value. It helps investors judge whether a property provides good returns relative to its cost.
Gross rental yield is calcualted by dividing annual rent by the property’s purchase price, then multiplying by 100. For example, a proeprty worth $500,000 earning $25,000 in rent per year has a 5% gross yield. Net yield goes one step further, facrtoring in expenses such as property maintenance and insurance. In Australia, yields vary widely by area. Regional properties may have hgiher yields but slower growth, while city properties often have lower yields and higher growth potential.