Guide

Rental yield versus cashflow

Yield is a fast screen, but cashflow is what determines whether a property is easy or painful to hold.

Introduction

Rental yield is useful for quick comparison, but it only tells you how rent relates to purchase price.

Cashflow tells you what actually happens after operating costs and financing are applied.

Gross rental yield is annual rent divided by purchase price. Cashflow starts with rent, then subtracts fees, holding costs, and debt repayments.

Because debt can dominate the result, two properties with similar yields can produce very different annual cash outcomes.

Yield is faster to estimate from a listing.
Cashflow is better for decision-making after you know the financing assumptions.
Break-even rent is often more actionable than gross yield when underwriting a deal.

A property can have an attractive gross yield and still be negative after debt and recurring costs are applied.

When rates are elevated, cashflow usually matters more than yield because small rent shortfalls are less forgiving.

The most common mistake is using gross yield as a proxy for affordability or hold quality.

That shortcut ignores debt structure, deposit size, strata, council charges, and management fees.

The rent sensitivity calculator keeps purchase price and debt assumptions fixed while rent changes row by row.

That makes it easy to spot the weekly rent needed to break even under both interest-only and principal-and-interest structures.

Once you know the break-even rent, use the purchase price sweep to see whether the acquisition price is the real variable that needs to move.