High Yield Properties

Also it depends on whether the yields are net or gross, I haven’t read the book but it would be entirely possible to have a gross yield of %30 and still be losing money…

I agree, Valuer, that there are many CF+ deals around. My question though, is are those places desirable? Having some knowledge of ewhat one can get for 35k these days… I am wondering- will the place need repairs? Will you be able to find other tenants if those ones leave? I am sure you have done your due diligence, given your occupation, and maybe you’ve come across some winners in these deals!

I think people who have looked at RE enough, know that CF+ deals exist in australia. Problem is, they are now is such small towns, and I think there is a much greater risk. So you get 3k a year in rent, but owning IP’s costs me much more than 3k per year for each one- insurance costs, interest, rates, water, PM costs, etc etc… You may end up getting a 2k tax deduction on it. Will there be room for CG on the place in this flattening market?

Not trying to put a dampener on things- just trying to look at it differently.

kay henry

Valuer- all good- and thanks for your reply

My questions were more for the audience of those who were new to the market. Justr for them to think about stuff, but you obviously know what you’re doing

It’s just my call, but I *do* think the market is flattening in WA and Taz. Depends on what you call flattening. The RB said the “bubble” is over, and we haven’t been seeing the great CG’s of the last quarters. So yes, I would call Australia a “flattening” market (I didn’t say it was dead, just flattening).

kay henry

1Hotvaluer,

If you are holding property for the long-term, surely, Tasmania, doesn’t have the fundamentals to be an optimal location to invest in property.

From 1976-2000, population growth in Burnie-Devenport, Hobart & Launceston are in the lowest 15 cities in a 70-city average. Other cities/towns in this bottom 15 includes Mt Isa, Broke Hill, Mount Gambier (Source: Bernard Salt Report 2003).

You would be in a better position to know property prices, but just wondering whether over time, you yield will continue to rise, only because the value of the property is falling. Burnie is an example of this, especially after the woodchipping industry was all but closed.

Outside of logging and eco-tourism, what industry does Tasmania have to attract jobs, industry and people with high disposable income?

James

I haven’t read success stories, but I’ve got two points to make. First make sure you are talking about yield not C0CR (Cash On Cash Return).
And second, in the US you can actually find profitable properties and it’s not that hard! Okay it is hard in Califrnia and New York, but in many other cities it is not difficult. In my opinon the reason for this is the fact they do not have negative gearing. In Australia, every man and his dog have bought an IP and 95% are negative gearing. This cuts our returns down big time.

Just food for thought.

Rgds.
Lucifer_au

Lucifer, from memory there are Aussie stories, and I think Kiwi stories as well – to show that it can be done worldwide I guess!

But again, how long does it take to a. receive submissions from your readers, go through them to choose the ones to use, prepare them in readable format, get them edited, and then published etc. etc.

So wherever the deals were found, it was at least a couple of years ago. I’m not saying that they are impossible to find now, just that you need to be really creative. I think there are some creative ideas in the book, but (again from memory – maybe I’d better read it again[biggrin]) a lot of the deals were stock standards available at the time…..

Cheers
Mel

I too was reading the book and found the examples to be almost impossible in todays aussie market. I did read a book though (Australian) which I thought was fantastic about aussie success stories.

It looks at 12 “ordinary millionares” that made there fortunes through property investments in australia. They all took different paths, som positive, ,some negative, some developers etc.

A great read

Ordinary Millionares by Jim McNight

Tikki pointed out a relevant factor in finding property – knowledge. Before I bought an investment property I had spent 4 years following prices in that location, getting knowledge on streets in that location, so that when a cheap block of units came up I was able to purchase confident that despite the fact locals say that street has a bad reputation that the area had changed. The property was giving a yield of 16% at the time of purchase, as tenants vacated rents were increased 20% and the property has had substantial capital growth well above that town’s average growth during the same period.

My latest venture is a poorly managed commercial property (borrowed 108% using increased equity in previous investment as security). Yield about 7% on purchase. In the 2 months since purchase increased monthly rental by letting some of the vacant space. Current yield just under 11% on purchase price. Still have extra space to let. Fully let will give a yield of about 18% on purchase price. QS has valued building for depreciation at twice purchase price.

In the past two years I’ve also missed out on a couple of excellent deals that more than met the 11 second rule because I dithered because my local knowledge of a neighbouring town wasn’t good enough.

Tikki, I’m quite agreeable to purchasing in small country towns because there’s always going to be a demand for reasonable rental accommodation but many of these towns might not have +ve pop growth. Hopefully the higher yield that is available in many of these towns covers the risk.

crj

Hey I’m dumbo the new elephant
Just starting to study this facinating occupation of investment property…could someone tell me what this yield is you are all talking about and how do you calculate it to know what percentage you will get when viewing a property????

still very green [puke]