ILLUSTRATIVE EXAMPLE
Why the higher rental yield can leave less cash
Gross rental yield measures rent relative to price. It leaves out vacancy, operating costs and finance, so it cannot tell you whether a property is cash-flow positive.
Published 2026-10-23 · LANDICATION · Educational content
Two hypothetical rental scenarios
Both properties have an assumed $600,000 purchase price and $480,000 interest-only loan at 6% a year. Annual interest is therefore $28,800. Interest-only is used to make this arithmetic transparent; it is not a recommendation and does not repay principal.
| Input or derived result | Property A | Property B |
|---|---|---|
| Assumed weekly rent | $650 | $600 |
| Gross yield: weekly rent × 52 ÷ price | 5.63% | 5.20% |
| Assumed vacancy per year | 4 weeks | 1 week |
| Rent collected after vacancy | $31,200 | $30,600 |
| Assumed management fee | 7% of collected rent | 7% of collected rent |
| Management cost | $2,184 | $2,142 |
| Other annual operating-cost budget | $9,000 | $5,000 |
| Annual loan interest | $28,800 | $28,800 |
| Annual cash flow before tax | −$8,784 | −$5,342 |
Follow the cash, not only the percentage
Property A has the higher headline yield but a $3,442 larger annual cash shortfall. The calculation is rent after vacancy, less management, other operating costs and loan payments. The operating budgets are hypothetical combined allowances for items such as rates, insurance, strata and maintenance.
Neither result includes purchase costs, capital growth, tax effects or a future change from interest-only to principal-and-interest repayments. A different loan or cost assumption changes the conclusion.
Move from Finder to Planner
Use Property Finder’s available estimates to build a shortlist, then open Property Planner and check the inputs behind each candidate. Set weekly rent, vacancy, management, individual annual costs and loan details to values appropriate for that property.
A stored asking price or rental estimate is not an achieved transaction. Inspect source information, obtain current quotes and check whether the listing is still available. Compare cash flow using consistent financing assumptions.
Further checks
The official resources below can help you check current requirements. Links checked 2026-10-23.
Information is general and does not take account of your circumstances. Confirm current requirements, costs and site-specific issues with the responsible authority or appropriate adviser.
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