hi everyone
just wondering, how much yield is considered good at this time?
i just read from another topic in this forum that 8% is good. but while chatting with a real estate agent recently, he mentioned that right now, you’ll be lucky to find anything over 4%.i’m interested to hear people’s opinion on this
cheers![strum]
Hi suffragette,
It depends on what you want to achieve out of it. If you want to have a positively geared property, you probably need around 6.5-7% yield plus decent depreciation.
If you are looking at cash flow positive property, you need around 10-11% yield.
You can still find some positive cash flow properties in regional towns.
Regards
Sanjiv“There is no passion to be found playing small – in settling for a life that is less than the one you are capable of living.†– Nelson Mandela
Sanjiv is right.
It was a lot easier to find cf+ properties about 7 years ago.
Nowadays it is pretty unlikely that you buy a cf+ property. But if you find a property yielding 6-8% you may be able to improve it enough to get your 10-11%.
The two main ways to improve a property is to subdived and/or renovate.
If it were easy, everybody would do it. You have to do a lot of research, running around, asking questions, try different scenarios, etc. Steve’s main mantra is:
Problem + Solution = Profit
As the rents have not kept up with the property prices, some people have changed tack completely. Expecting the market to stay level or only show modest growth, they do not look for buy and hold properties.
Instead they buy, improve, sell. There is good money in this, but you need to be careful. You may now be running a busines, which carries a lot of tax implications.
Good Luck
Depends where and what sort of property. generally in Sydney yields are around 3-4%, so anything over this is good.
Terryw
Discover Home Loans
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hi all
thanks for all your replies
i’m thinking about melbourne. outer suburbs.
i know in regional areas it’s easier to find higher yield properties, but in major cities it’s alot harder….
[mellow]Most properties will be around 4-5% now but it is possible to get higher with some creative stategies.
The rental yields are usually published each quarter in the API magazine in the back section.
We generally use:
Rental yield
Low 0-5%
Med 6-8%
High 8%+For vacancy rates
Low 0-3%
Med 4-6%
High 7%+AmandaBS
http://www.propertydivas.com.au
FREE online Property Resources“It is better to be inconspicuously wealthy, than to be ostentatiously poor…”
Don’t forget that real estate agents like to “condition” people. If you are looking for 8%, and he conditions you to expect 4%, and then can present a nice little 5%, you will feel warm and fuzzy and stop looking for 8%.
I don’t know much about yeilds in different areas, and the other people answering here are most likely in the ballpark, but don’t believe a person that is trying to sell you something. They may be true and honest, but do more research. They may also be quoting averages, but you may look harder and find a better than average, like mentioned above with doing a reno etc.
With current rental vacancies so low the price of rents is being pushed up, but people only earn so much money, so they can only push up so far in a time period.
Good luck – you are researching, so you will learn, and that is good.
kjs
8+
Hi,
I am extremely new to this and have only read half of Steves book so excuse my dumb question but here it goes…
Everyone talks about return % or yields. Just wondering how you calculate this. for example your rental return. Does rental return take into account expense, depreciation etc.?
I have my head around the Cash on Cash Return form Steves book but would like some more formulas if you have them.
Thanks
BenRental yields are normally quoted on r/e sites as a percentage of the purchase price as advertised.
eg; Property is asking $200k. rent is $200 per week ($10,400 per year). This is a 5.2% yield. (yearly rent, divided by purchase price, multiply by 100).But, if you do a calculation including the purchase costs (usually 5-6% of purchase price) then the yield will be lower.
Cheers,
Marc.
[email protected]“we get sent lemons; it’s up to us to make lemonade”
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