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To determine the gross rental yield for a house and land package, apply this formula: Gross Yield = (Annual Rent / Purchase Price) × 100

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Example Calculation

Consider this scenario:
  • Weekly rent: $550
  • Total package price (land + build): $650,000
First, convert weekly rent to annual: 550×52=550 × 52 = 28,600 Then apply the formula: (28,600/28,600 / 650,000) × 100 = 4.4% gross yield

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Important Considerations

Gross yield does not account for expenses like council rates, insurance, maintenance, vacancy, or property management fees. These costs would need to be subtracted to calculate net yield instead. A key takeaway is that builders and marketers often promote gross yield because it’s simpler and appears higher. This makes gross yield a useful comparative metric, but it doesn’t reflect actual profitability after accounting for operational expenses.