Glossary · Australian property
Net yield.
Annual rent minus annual holding costs, divided by purchase price.
Net yield is the post-costs yield calculation. (Annual rent − annual holding costs) ÷ purchase price. Holding costs typically run 0.8% to 1.5% of property value per year for established stock. Higher for strata-titled apartments, lower for established freehold houses.
Net yield matters more than gross yield for cashflow analysis because it determines whether a property funds itself out of rent before tax effects.
Worked example
$650,000 purchase, $29,120 annual rent, $9,500 annual holding costs. Net yield = (29,120 − 9,500) ÷ 650,000 = 3.02%.
Related terms
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