If you’re searching for the best rental yield in NSW, you’re probably considering getting an investment property. They have proved time and time again to be a solid investment in terms of passive income. Renting out your property can bring good returns that are tax-free!
On the other hand, it can be a daunting and risky process. Real estate is rewarding but only if you make the right choice. So before we dive into where you might make the most profit from rent, here are a few things to consider before you make your choice.
How to choose the right investment property
Research the neighbourhood
The suburb’s liveability and amenities like transport, shops, schools and healthcare facilities are all crucial factors. You’ll also want to avoid suburbs and areas with a high vacancy rate. Check out our guide to property research tools to learn about what else to look out for.
Check out the prices
There are tons of tools online, both free and paid, that you can use to get an idea of the local market value. Look at both selling prices as well as average rent.
How is rental yield calculated?
Your rental yield is a measure of how much income from the investment you’ll make. You can do research on where to find the highest rental yields in Australia to get an idea of how they vary.
Gross rental yield
To calculate the gross rental yield of a property, you take the annual rental income, then you divide it by the property’s value and multiply it by 100. So let’s say the rent of a property is $300 a week. A year of that would be $14,400. So if you bought the property for $400,000, the gross rental yield would be 3.6%.
Net rental yield
Your net rental yield includes all expenses associated with buying the property like legal fees, inspections, stamp duty, marketing costs of your rental listing as well as any loss of income when the property was vacant.
You use the same formula to calculate net rental yield, except you subtract the yearly expenses from the annual rental income.
What is a good rental yield?
It depends on where your property is located. In the capital cities, anywhere between 7-8% is good. In the regions, houses and units are a little different. Houses offer good rental yields of 12-13% and 8-11% for units.
Suburbs with best rental yield in NSW
Here are five suburbs with the best rental yield in New South Wales for houses, according to Smart Property Investment.
Broken Hill
- Median sale price: $140,000
- Median weekly rent: $270/week
- Rental yield: 10%
Broken Hill is an old mining city in NSW that sits on the border to South Australia. You’re over 1,000 kilometres from Sydney and pretty much in the outback here, surrounded by semi-desert. But you still have a well-known park with lovely gardens, as well as attractions like the Living Desert Sculptures.
Housing prices are low and while the town doesn’t boast a particularly vibrant cultural scene, the community is largely made out of families who have settled down, and retirees, giving it a slower pace.
Wellington
- Median sale price: $210,000
- Median weekly rent: $260
- Rental yield: 8.67%
Wellington is almost a 5-hour drive from Sydney. It has a few natural attractions like the Wellington Caves and Lake Burrendong, the latter being a lovely place to fish and kayak.
There are many heritage buildings which give the suburb a nice, classic feel. Overall, it’s a quiet town, with most of the fun activities out in nature.
Cobar
- Median sale price: $176,500
- Median weekly rent: $270/week
- Rental yield: 7.95%
You’ll find Cobar in central western NSW. This is an outback town, meaning the landscape is impressively beautiful. Many of the townspeople work in mining, as that industry is heavily relied on.
The community is strong here, with events planned by the locals quite often. People are known to be polite and neighbourly, keeping the town safe.
Condobolin
- Median sale price: $176,500
- Median weekly rent: $270/week
- Rental yield: 7.95%
Condobolin sits on the banks of the Lachlan River. With a population of 3,500 people, the lifestyle here is super laid back. Everyday is another opportunity to spend time in the surrounding nature, hiking, fishing and camping.
“Condo”, as it’s become known today, also has good sporting facilities like a golf course, swimming pool and tennis courts.
Moree
- Median sale price: $290,000
- Median weekly rent: $280/week
- Rental yield: 5.02%
Moree is another river town, but by the Mehi River this time. It flourished in the 1960s as an important cotton-growing area. The town has about 7,300 people living there and is about a 650 kilometre drive from Sydney.
People will say that the population in Moree is growing, which also contributes to the community spirit it has. There are decent amenities like shops, cafes and restaurants, as well as decent healthcare and schools. Another pro? You’re just an hour drive from Queensland.
Looking for your dream home?
Download the soho app. With the app, you can contact agents quicker, browse through your property matches and ultimately find your dream home even sooner. We are finding you homes we think you’ll love, so don’t forget to shortlist or swipe left on our listings so we can send you others that better match what you’re looking for.
If you liked our article on the best rental yield in NSW, you might also wanna check out our Cheapest Beach Towns in Australia and our Cheapest Suburbs in Sydney.
