澳洲Australia property What is the crappiest rental yield you wi


在澳大利亚 The pool at of an IP needs to be resurfaced (or so the pool doctor says), the cost was estimated to be $10K ($10,000), after recoverying from my impresssion of a cat coughing up a fur ball, it just seems far too much. Its just a standard poo I need some advice regarding a property purchase. Property - semi-detached house Bedrooms - 2 Condition - average needs internal reno to modernise Street - one of the best in suburb Location - excellent Close to schools - yes Transport - 50m


Just wondering, or what is the rental yield when you buy, taking capital growth into considering.  

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I like to see a 5 in front of the gross yield. The bare minimum would be high 4's like 4.8% or 4.9% and it would have to be a house with decent land.

Cheers,
Oracle.  

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Agree....but that was when rates were 6 something.

Now I would want something in high 5s with a 6 in front.

I think we will see some investors who bought property with a 5% yield but very little potential to increase rents struggle.

Believe it or not I have one property (Qld) which is fixed at 5.24% and it rents out for 250pw on a 242k loan. When the IR rate goes to 7%+...it is going to hurt!:eek:

oracle said: ↑
I like to see a 5 in front of the gross yield. The bare minimum would be high 4's like 4.8% or 4.9% and it would have to be a house with decent land.

Cheers,
Oracle.Click to expand...
 

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min yield is the mortgage value + outgoing + some more.  

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5.5% or more with a little work around settlement(minor reno, small feature addtions). i would only go lower, on development potential or something with a good depreciation amount for the first 3 years or so till it can be moved to neutral/postive.
vs
PPOR = only care from a pricing perspective, ie is the suburb in a bubble price wise, is it vastly lower than the long term trend for the area.  

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7% minimum.

Unless its flip/massive equity.  

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You are all way too low in my opinion, 4's and 5's i wouldnt get out of bed for, seriously....

With rates the way they are going now you people would be better off keeping your cash in a term deposit at UBank...

Property sliding in many areas but bank interest heading north, think about it....

i must be hard to please as I'm at double digits for any investment and that's nett return.....no wonder i turnover property so much.....i tend to chase cap gains more.  

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on the move said: ↑
Just wondering, or what is the rental yield when you buy, taking capital growth into considering.Click to expand...
i would again and have before taken zero % yield.  

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sash said: ↑
Agree....but that was when rates were 6 something.

Now I would want something in high 5s with a 6 in front.Click to expand...
Sash, You've been in this game "long time" and I respect your views.

What percentage of the rental increases you have managed over the last, say, 5 years have shown as pre-tax (EBITDA) improvement in your nett?

I ask because I found it hard to raise rents but my insurance coy, local council and PM were always happy to share my wealth. Note: I am outside the Land Tax regulations and shudder when others mention this. :(  

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Hang on...are there not variables.

In my employment I have seen many a property returning 10% and these are often the ones a few years later lucky to return 3-4% because of a change of economics in the region.

Rental yields should be part of the consideration.  

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on the move said: ↑
Just wondering, or what is the rental yield when you buy, taking capital growth into considering.Click to expand...
Hrmmmm if im highly confident of good capital growth, i will accept a lower rental yield.

To give you an idea of the gross yield on my residential propertys when i purchased them ill list below

Property 1: Purchased May 2008 335k, 2.5k Reno Rent 335pw. 5.16%

Property 2: Purchased Jan 2009: 250k, 5k Reno, 295pw. 6.01%

Property 3: Purchased Nov 09, 318.5k 8k Reno, 380pw. 6.05%

Yields have now increased to

P1: 6.47%
P2: 7.24%
P3: 6.37%


I have slightly more problems (defaults, repairs etc) at P2 then P1 and P3


Regards,

RH  

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Most of my purchases tend to be mid to high 4's, with a fair chance of hitting 5-5.5 within the first two years, i generally invest for growth rather than cashflow, although i'm not willing to accept the 3% yields some inner city growth properties currently offer.  

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thanks guys, good to know at what yield people are buying.  

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Property bought last year is getting 5.0%, the one bought a few months ago is getting 4.3%. For me I'm looking for a balance of yield and capital growth. Inner city provides too little yield, however didn't want to go regional either with better yield, so both properties are 20km & 40km from Melbourne near beach so I'm hoping (gambling?) they'll both see good growth long term.  

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Rental yield needed for positive cashflow?

Good to see people sharing information on what their rental yields are.
It gives us novices a picture of what to aim towards.
I am currently looking to find an IP and would like to know if there is a formula for roughly estimating the +ve cashflow per annum on a particular yield after costs?
Regards
JCM  

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JCM said: ↑
I am currently looking to find an IP and would like to know if there is a formula for roughly estimating the +ve cashflow per annum on a particular yield after costs?Click to expand...
Hi JCM,

Mortgage rates are what? 7.8% or thereabouts. Running costs are 1.5% as a rough rule-of-thumb. You can add back a bit for paper loss (depreciation) of about 0.5% (again just a rough figure, unless you are buying brand new).

So you need an 8.8% yield (7.8 + 1.5 - 0.5) just to get cf neutral if you are borrowing ALL of the money.

I uploaded a simple spreadsheet to calculate what you're after on this thread:
http://www.somersoft.com/forums/showthread.php?t=66463  

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8.5% gross yield for me - minimum.

That gives me 6% net plus an implied 3% CG so up around 9-10% total return which is the minimum I find to justify the hassles and risk of owning IPs.  

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Seems Unatainable in the current market!

Thanks for the informative responses! Gives me a good quick indication on what i need to find.

Wow that is quite a high yield required. It does not seem possible in the current market in the outer suburbs of Melbourne. Some members here did mention suburbs like Seaford, Frankston even Ballarat but even those yields were only up around 7-7.5%.

Would be interested to know if it is still possible to find those yields in outer Melbourne or large country cities???

Much appreciated

John  

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JCM said: ↑
Would be interested to know if it is still possible to find those yields in outer Melbourne or large country cities???Click to expand...
John, you asked the same Q here: http://www.somersoft.com/forums/showthread.php?t=66723 :)

There are only 3 ways to get that kind of yield that I know of (or maybe 4):
1. Buy commercial
2. Buy a dual income property - i.e. house & bungalow (2 x lots of rent)
3. Put in a very large deposit so that you are not borrowing much
4. Buy a burnt out or termite infested property for close to land value (ala Nathan) and then do a cheap reno/rebuild to then rent out  

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JCM said: ↑
Some members here did mention suburbs like Seaford, Frankston even Ballarat but even those yields were only up around 7-7.5%.


Much appreciated

JohnClick to expand...

Hi John,

If you can get 7 - 7.5% yield, go for it! Not sure what you have found in these areas that gives you such a yield??

For resi, these yields are good.

What I will say though is that there is no perfect investment. A location may seem to offer high yields - but different risks come into play. (eg tenant quality, fewer industries in the town meaning that your investment could come unstuck if the industry closes or reduces it's capacity - eg mining towns, low capital growth) etc.


Regards Jason.  

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