Id like to run this past you guys for your opinion. forgetting about wraps for a moment i’d like to question whether the rental market in ROI terms is really that bad. 3,4,5 years ago people were achieving rents of 6-7%, today we are looking more at 3-4% which on paper is pretty damn bad, however back in the glory days of 6-7% returns, interest rates were around 9% correct? nowdays in a 3-4% ROI environment interest rates are around 6%. Thus the difference in outgoings vs income is not much different. what do you think?
Spot on! The concern often isnt rental amounts vs interest ammounts but more vacancy. Having a property vacant will really cost you. Some areas have high vacancy rate especially around Melbourne. High vacancy rates cause low yeilds.
Of course if its positive cashflow your after 3-4 percent rental wont do it!MJK
Hi there,
Which of the areas around Melbourne are experiencing high vacancy levels from your experiences? I do see many ‘for lease’ signs up, but in Bentleigh areas and surrounds, they haven’t stayed up for very long.
I believe renters are also becoming more savvy with negotiating their rent.
What have your experiences been like?
Cheers
Sooshie [
]“small steps make the journey” (SAS)
Sooshie
The fact that you’re seeing signs at all suggests the market has softened at least a little.
When houses rent so fast that there’s no time to put a sign up, then you know the market is strong with low vacancy.Keep smiling
Felicityi work on st kilda rd – and can tell you sth yarra and prahran have lots of vacancy signs outside. also driving around templestowe and doncaster, fitzroy etc lots of ‘for lease’ signs.
2 years ago i cant really remember seeing any ‘for lease’ signs.
id say that if you took cbd & southbank out of the equation, vacancy rates would be much lower. suburbs like footscray, northcote, elwood even port melbourne with all its development have low vacancy rates, mainly because people want to live there and in suburbs like footscray theres next to no land and tough building regulations regarding density etc. when you look at the cbd theres thousands of identical units in a noisy dirty area with no trees etc. + look whats happening now, as theres less land in the cbd to build all they do is build on top of other building.
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