I have been surfing the net recently and i have recognised a trend that 90 – 95% of the properties 30 -40 kms from the city will have an average income of 4-5.5% ie. all negatively geared with the current interest rates. Anything around 6% will be considered an exceptional buy. Recently purchased in Dandenong for 5% returns and looking to buy some more around there. Anyone with similar thoughts out there about buying areas in Victoria etc?
Hi fjficm
my partner just bought in Berwick, seems the freeway extension has done a lot for that area.
Kyl
Hi
The way I see it. Historically the yield on property is usually 1-2% below the current interest rate.
In the past in areas like Frankston and Dandenong you always got a yield 1 to 2% higher than the current interest rate.
Thats not the case now, so be aware of that. Those that got into property 10-15 yrs ago will be circling those that over extend.
As an example – Frankston unit bought 1998 $95k with rent of $130 a week 7% yield. NOW worth $200k rent $160 4% yield.
To get to a more historical balanced market, something must give. Will rents increase (too much supply of rentals), Will incomes increase (maybe but then so to will interest rates) If interest rates start rising then the guy who bought at a yield of 4% will start to struggle while the guy with a yield of 7% is in a better position.
I suppose what I am saying is Dont overextend
Yack
I would have thought an oversupply of rentals would force the prices down, not up.
cheers
rthx for the tips guys. anything else would be helpful
hi all
yes i think we all agree that anything near melbourne is purely a negative geared proposition, and the only way to make money will be through capital growth which may not happen for a few years. even regional cities and towns are experiencing the same thing (not the situation 12 months ago). it would take a brave man/woman to invest heavily in negative geared properties.
Richmond on reflection of Yack’s comments i think you two are saying the same thing. his bracketed comments are saying its not likely to happen because of the oversupply of rentals. By the way as i haven’t spoken to you since your wedding did you both say yes ? [^] i hope so. my dad was a minister and he never had a wedding where the parties didn’t go through with it, but one time in a mining town in SA they had to go and get the groom out of bed as he was still asleep after a big night before.
westan
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