hello
Can anyone tell me where i would go to find out estimated rental return on properties and how I would go about researching this? i am looking to get into the market in the next three months however I am not well educated on the property market and very keen to start the research process.
i also read that if I was investing that the bank takes into consideration rental return (in relation to my borrowing power), is this accurate?
Cheers
Brines
Hi Brines,
Teh formula for calculating rental returns is
52 weeks X weekly rent divided by purchase price multiplied by 100 to give rent return in percentage terms
Eg rent of $400/week and property being purchased is $300K
Rent return is
52 X 400 = $20800 / 300000 = 0.069 X 100 = 6.9%
Some people allow for vacancies and prefer to use 50 weeks in the year. If this describes you you would replace 52 weeks with 50 weeks.
The information about price and expected rent are both available through advertisements for the property or by contacting the selling agent. If there is no lease in place the agent should be able to provide you with an estimated rental figure.
Banks do factor in expected rental income when assessing your borrowing capacity.
Hi Brines
Welcome aboard.
Are you talking about how much properties in a particular area will rent for?
If so, there's a few sources of info.
Online rental listings on websites like realestate.com will give you a good indication.
There's also suburb profile data available online and through reports from residex, ect.
Local property managers will be a good source of information. Call up a couple and let them know that you're looking to purchase in the area and would be interested in using their services – have a quick chat about the anticipated rental prices and demand for the area.
Real estate agents will also offer up their opinion but it may be inflated to entice you.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
brines wrote:helloCan anyone tell me where i would go to find out estimated rental return on properties and how I would go about researching this?
Brines, there is no one stop shop for info on rental returns. Research is your best guide ie look at the main rental websites ie domain & realestate, haunt the doorstep of agents and pick up their rental/sales lists etc then check out rentals in your preferred area and compare them to your property or to properties which are for sale – location, size, condition, features, parking, amenities etc to give you an insight into returns.
The banks will take the expected rental letter as per the agent's letter however in most cases and particularly when servicing is tight – the bank will take the valuation on the valuation that is conducted.
Also think about the bigger picture – for example, can i build a second dwelling in the back? Back I build a GF in the back? If so what are the costs and the expected rental returns for both dwellings?
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
Email Me | Phone MeResidential and Commercial Brokerage
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