Quick answer: To calculate rental yield, divide the annual rent by the property price and multiply by 100. Rental yield is your annual rent as a percentage of the property’s price. Gross yield ignores costs, while net yield subtracts them. On a house and land package, the yield you’re shown depends on two numbers you should check: the price, which may include a commission, and the rent, which may be propped up by a rental guarantee. Local vacancy rates tell you whether that rent is realistic.
What Is Rental Yield?
Rental yield measures the income a property produces relative to its price. It lets you compare properties at different prices on the same basis. It doesn’t include capital growth, so a lower-yield property can still be a good investment if it grows in value, and a high yield can hide high costs or a weak market.
How to Calculate Rental Yield
Gross yield = annual rent ÷ purchase price × 100. A home renting for $600 a week ($31,200 a year) bought for $650,000 has a gross yield of about 4.8%.
Net yield = (annual rent − annual costs) ÷ purchase price × 100. Costs include property management, insurance, council rates, water, maintenance and vacancy. Net yield is the more useful number, and new builds often have lower maintenance costs in the early years.
Worked example (illustrative figures):
| Item | Amount |
|---|---|
| Weekly rent | $600 |
| Annual rent ($600 × 52) | $31,200 |
| Purchase price | $650,000 |
| Gross yield ($31,200 ÷ $650,000 × 100) | 4.8% |
| Annual costs: management, insurance, rates, water, maintenance and vacancy allowance | $7,000 |
| Net yield (($31,200 − $7,000) ÷ $650,000 × 100) | 3.7% |
Swap in your own rent, price and costs. The costs on your property will differ, so ask your property manager and insurer for quotes.
Two Ways a House and Land Yield Can Be Overstated
- An inflated price. When a package is sold through a third party, the builder or developer commonly pays the seller a commission that’s built into the price. Builder commissions can run into tens of thousands of dollars. You pay more for the same rent, which lowers your real yield. Here’s how hidden commissions work.
- A guaranteed rent. Some packages come with a rental guarantee above market rent for a year or two. When it ends, the rent may fall to the true market level. Base your numbers on comparable rents without the guarantee.
Want to know the real yield on a package?
We’ll check the price and the rent assumptions before you sign.
What Vacancy Rates Tell You
The vacancy rate is the share of rental properties in an area that are empty and available. A low vacancy rate usually means strong demand from tenants, faster leasing and upward pressure on rents. A rising vacancy rate can mean supply is outpacing demand. Data providers such as SQM Research publish vacancy rates by postcode.
For house and land investors, the most important vacancy risk is supply in the estate itself. In a new estate, dozens of similar homes can finish within months of each other and compete for the same tenants. Before you buy, ask:
- How many homes are due for completion in the estate over the next 12 months?
- What share of buyers in the estate are investors?
- What do comparable new homes nearby actually rent for, and how long do they take to lease?
Rentvesting With a House and Land Package
Rentvesting means renting where you want to live and buying an investment property where you can afford it. Many first-time investors use a house and land package in a growth corridor to get into the market while continuing to rent closer to work. The rent you collect helps cover the loan, and new builds offer strong depreciation. The trade-offs: you don’t get owner-occupier concessions, and you need to hold the property through vacancies and rate rises.
Questions to Ask Before You Rely on a Yield
- Is the rent based on comparable homes, or on a rental guarantee?
- What is the net yield after all costs, including vacancy?
- How many similar homes are completing in this estate?
- What is the postcode vacancy rate, and is it rising or falling?
- Is the price fair, or does it include a commission that lowers my real yield?
How REIN Helps
REIN acts only for buyers of new house and land packages. We check the price, the rent assumptions and any commission built in before you sign.
REIN charges a service fee for our work, agreed in writing before you start. Where REIN receives a builder or developer commission on your purchase, we disclose it and rebate 100% (excluding GST) of it to you. The rebate typically covers the fee and more.
Common Questions
How do you calculate rental yield?
Divide the annual rent by the purchase price and multiply by 100 for gross yield. For net yield, subtract the annual costs from the rent first.
What is the difference between gross and net rental yield?
Gross yield uses the rent alone. Net yield subtracts costs such as management, insurance, rates and maintenance, so it is lower and more realistic.
What is a good rental yield in Australia?
There’s no single number. Yields vary by city, suburb and property type, and higher yields often come with lower growth. Compare the net yield on a property with similar properties nearby, and make sure the rent is realistic without a guarantee.
What is a healthy vacancy rate?
A vacancy rate around 3% is commonly treated as a balanced market. Below that, tenants compete for homes and rents tend to rise. Above it, landlords compete for tenants. In new estates, check how many homes are completing at the same time.
Is rentvesting a good strategy?
It can be, if you can afford to hold the investment through vacancies and rate rises. It lets you live where you want while building equity elsewhere. You give up owner-occupier concessions, so compare the numbers with buying a home first.
Before you sign anything…
Send us the package. We’ll check the price, any commission built into it and the contract terms, and tell you straight whether it stacks up. Free, no obligation.
GET MY PACKAGE CHECKED → or call 1300 446 445
Written by the REIN Editorial Team. Researched with the help of AI tools, then fact-checked against the sources below. Last updated 6 October 2026.
Reviewed by Scott Fraser, founder of REIN, licensed real estate agent (NSW) with 10 years on the developer side of house and land.
Sources
- SQM Research – Residential vacancy rates, accessed 1 October 2026
- Moneysmart – Investing in property, accessed 1 October 2026
About this article: This article is published by Real Estate Investors Network Pty Ltd (REIN). Statements of opinion are ours. If you believe anything in this article is inaccurate or out of date, please call us on 1300 446 445 and we will review it and correct it promptly. This is general information only. It does not take into account your objectives, financial situation or needs, and is not financial, credit, legal or tax advice. Rules differ between states and change over time. Consider seeking independent advice from a licensed professional before acting. A REIN service fee applies to our services, and where REIN receives a builder or developer commission in connection with a client’s purchase, it discloses and rebates 100% (excluding GST) of that commission to the client under its written service agreement.