Start with the income you keep
There is no single rental yield that makes every property a good purchase. Your expenses, borrowing and reasons for buying all matter. A gross yield is a quick comparison; net yield and cash flow tell you more about the commitment.
Rather than aiming for a magic percentage, ask: how much income remains after the bills, how much cash will I need each week, and what happens if the rent stops?
A collects $30,000 and keeps $20,800 before finance and tax. B keeps $16,400. The difference is $4,400 a year.
Compare like with like
Use the same vacancy allowance and the same expense categories. Include strata, insurance, management, council rates and maintenance where they apply. A listing that leaves out one of these can appear more attractive without producing more income.
Compare the income with the cash you contribute, too. Borrowing changes cash flow without changing the standard net rental yield. Our gross and net yield guide shows both formulas.
Work backwards from your target
$20,800 ÷ 0.04 = $520,000 at a 4% target net yield.
This is a price consistent with that income target, not a valuation. It excludes purchase costs, finance, tax and growth. In the calculator, open “Test a tougher year” to explore a target yield alongside a vacancy and interest-rate scenario.
Check the property behind the percentage
Ask for evidence of achievable rent and the major bills. Read the inspection and strata records. A high yield can coexist with expensive works, weak tenant demand or a difficult resale.
Keep three scenarios: your expected case, a lower-rent case and a difficult year with repairs. A property you can fund through all three deserves more attention than one that only works under its best assumptions.
Further reading: ASIC Moneysmart: property investment. Related: calculate weekly holding costs.