Rental Yield

Rental yield is one of the most important metrics for investment property owners because it indicates the property’s income performance relative to its value. It is typically calculated using either gross yield, which considers total rent before expenses, or net yield, which accounts for costs like maintenance, management fees, insurance and vacancy periods. Investors use yield to compare different suburbs, assess whether a property is underperforming and decide whether to raise rent or improve the property. A higher yield generally means the property generates stronger income, although extremely high yields can sometimes signal higher tenant risk or lower capital growth areas. When selling, your property’s rental yield is a major factor in attracting investor buyers, so presenting accurate rental history and occupancy rates is important. A knowledgeable agent can highlight yield strengths and demonstrate future growth potential to appeal to serious investors. Strong management, reduced vacancy and thoughtful improvements can significantly increase yield over time.

Practical Example

You own a townhouse valued at $700,000 and it earns $35,000 per year in rent, giving it a gross yield of 5 per cent. Your agent reviews the rental market and identifies that similar properties are now renting for slightly more due to increased demand in your area. With their guidance, you make a few cost-effective improvements such as repainting and upgrading fixtures to justify a modest rent increase. The new tenants happily pay the higher rent because the property presents well and is competitively positioned. When you eventually decide to sell, your agent markets the property to investors by showcasing its strong yield, low vacancy rate and reliable rental history. This attracts competitive investor interest and results in a higher final sale price.

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