Hi,
I always hear people talking about yeilds. Iwas wondering if someone was able to give me a basic definition of a yeild – i believe it’s something to do with the percentage of the cost of the property as to the rental income.
Is there a formula for calculating the yeild and is this formula beneficial for purchasing a property at a certain price – or am i getting confused with the 11 second solution.
Also – I have owned an investment property (land)for 11 months – I realise that if i hold it for 12 months I will only pay 50% CGT. But my question is “Is CGT classed as settlement of the property after 12months or is it when the offer is accepted as I would like to put it on the market now.
///////////////////////////////////////////////ALWAYS SET YOUR GOALS FURTHER THAN YOU CAN REACH
– THEN STRETCH THAT LITTLE BIT FURTHER
Hey Gun.[
]
To me yield is the amount of return that you recieve for your investment. I always think of it in Farmers terms. If the farmer plants a crop he either has a high or low yield when it comes to harvesting time. this yield is merely how much the farmer gets back for his initial ivestment of time and seeds.
For us yield is how much we get back for our investment.
eg.Purchase cost : $54000
Rent/week : $140
Annualised rent : $140 * 52weeks = $7280Therefore my gross yield is 7280/54000 * 100
= (APPROX) 13.5%Now this is a gross yield.
To calculate my nett yeild I would factor in rates, mgt costs, insurance, repairs.
For example,
Rates : $1600
Insur : $ 450
Repairs : $ 300
Mgt Costs : $ 560 (incl GST)
Total : $ 2910
therefore my nett yield after expenses is7280 – 2910 = 4370 / 54000 * 100 = 8.1%
Then after interest of approx 6.1% I am looking at cashflow positive about 2%. Nothing to shake the earth but it doesn’t cost me to do it. And excepting unforeseen hiccups it is a no brainer investment for me. So I may only walk with $1000 per year but it is one thousand I didn’t have last year and the property has gone up since purchase around $20000 ( I settled 1 month ago and painted an polished the property myself – with a little help from a friend).
Hope this helps YG.
Enjoy
AD [:0)]“A successful person is one who can lay a firm foundation with the bricks that others throw at him.”
-David BrinkThanks AD, you are very helpful. I was almost embarressed to post this topic origonally as it seemed silly coz although I am learning I have so far focused my knowledge in other areas.
as the saying goes “if you don’t ask, how will you know” (or something like that)
So thanks, and thanks for the example it certainly helped
//////////////////////////////////
Always set your goals further than you can reach
– Then stretch that little bit further
//////////////////////////////////No problemo YG. Always glad to help. I know exactly what you mean by worrying about posting. I felt the same way and still do feel the same way on many occasions.
Enjoy
AD [:0)]“A successful person is one who can lay a firm foundation with the bricks that others throw at him.”
-David Brink
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