A headline yield can look attractive until the full holding costs are counted. Understanding gross and net yield helps you compare properties honestly and avoid overpaying for a number that does not survive contact with reality.
Gross vs net yield
Gross yield is annual rent divided by the purchase price. Net yield subtracts vacancy, management, rates, insurance, maintenance and other costs. Two properties with the same gross yield can have very different net returns, so always compare on net numbers.
Holding costs beyond the mortgage
Owners corporation fees for apartments, land tax in some states, water and council charges, insurance and periodic repairs all recur each year. Budget for them before settlement so the investment does not depend on zero vacancies.
Stress-test the numbers
Model the property at a realistic vacancy rate and with interest rates a little higher than today. If the investment still works under those assumptions, it is far more likely to serve you well over the long term.