DeanCollins wrote:

My thoughts exactly Charlie……if you have an 8-9% yielding apartment (do they even get that high in Sydney these days…..or are you calculating it pre any type of expenses……) then why on earth would you sell it.

I haven’t been able to find cookie cut ready to go 8-9% yielding properties but I have created them from obtaining new DAs, new development ie; villas and granny flat constructions previous to most of the market trying to also do Granny Flats which admittedly has slowed down the Granny Flat strategy for me. I haven’t found apartments to achieve this.

everyone may have their goal for rental yield, so what is the average that you aim for?
and when you have a high yield rental property, is it wise to sell it which you would be selling the goose laying golden eggs?
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Using a metaphor for the Golden Goose is ok but I think it simplifies the situation a bit too much. What I like to do when managing my portfolio is run a “Cash on Cash” return analysis along with “Available Capital on Cash” return analysis. This allows me to assess whether a “Golden Goose” is worth selling. Although the property is yielding just on 9% at the moment ie; $500 rent PW on a purchase price of $290,000 in an area with access to train line and the city I can take the capital that someone would pay for that property and turn that rent into $1400 PW by purchasing two new properties that are yielding 8%+.

I know these numbers might sound high balled but they are not. They are banked numbers.

The point that I raise with these numbers is that this thread has focused very much on Capital vs Cashflow but I believe that capital follows cashflow and if you can get your cashflow sorted on property than you will be able to raise the capital either through bank valuations and drawing down on the equity or through the sale of a property if that bank valuation has a large discrepancy between the market value and valuer’s analysis.

Great to get feedback on that thinking though and whether investors agree or disagree. I know that there are many other factors that influence capital growth but I believe there is a stronger correlation between capital and cashflow than sometimes is acknowledged.