Price: $499,000
Rent: $815 pwsuperAndrew | Property Analyser and Finder Tool
https://property-analyser.com.auhttp://www.realestate.com.au/property-house-nsw-west+kempsey-116806983
Price 100K
Rent PW $210
Yield 10.9%Click on the link http://www.realestate.com.au/property-house-nsw-west+kempsey-116806983
Price 100K
Rent PW $210
Yield 10.9%Click on the link http://www.realestate.com.au/property-house-nsw-west+kempsey-116806983
Price 100K
Rent PW $210
Yield 10.9%A very good example of the need for due diligence – and personal knowledge. That is enormously appealing BUT I would suggest a drive through and inspection of the surrounding area, and then a chat to the local coppers.
You will get that return, and probably will always be able to rent it, but the tenants will most likely not be long term – the good ones won’t want to stay in the street long and the others will just trash and move on.
The old adage of worst house in the best street applies to regional areas as well.I have a number of rental properties in Tas and NSW, all have been cashflow positive from day one, with gross returns between 10.3% and 7.75%. More importantly the net return is around 7% at purchase date.
My strategy is:
look for desirable locations – where there is a mix of services and industries- and within that a property market where there is strong rental demand at the lower end and good solid properties also at that end ( ex public housing properties are often good)
Buy mortgagee in possession and distressed properties that have been renovated (new kitchen /bathroom, air con etc) make sure they are well presented.
Target the pensioner/govt benefits market, through a good local agent. Properties that are affordable on benefits and that people can move into and keep as a home forever if they wish are always in demand.
Keep the maintenance up to date, keeps the tenants happy and avoids big bills.
Don’t get too much exposure to any one region or town.
If something looks too good to be true it usually is
Always pay less than replacement cost. Never buy new for investment.Hi Terry,
An interesting first post – I guess you are new here, so welcome aboard !! Your comment below intrigued me, and leads me to ask how you do it?:-all have been cashflow positive from day one, with gross returns between 10.3% and 7.75%. More importantly the net return is around 7% at purchase date.
That bit about Net Yield at 7% – I was most interested to learn how you do that if you wouldn’t mind sharing. See, even with the super-low Interest Rates of today, a 10% Gross would usually struggle to get 3% Net because a 5% mortgage Interest Rate would be having its effect, as well as the other ongoing expenses (Rates, RE fees, Ins, etc).
But if you eliminate the mortgage…… 7% is likely – is that what you have done? Or using wraps, lease options ?
Benny
Nice post Terry.
@benny: Net Yields can be sometimes misleading if you include interest expenses since you don’t know the loan amount. Loan amount could be 100%, 80% or 50%, which will lead to a completely different net yield.
I’m a assuming Terry is not including interest expenses in his yield (you can correct me here Terry, if I am wrong). His Gross Yield is 10% less expenses @ 3% that’s a net yield of 7%.
Terry when did you purchase these properties? Recently or years ago?
Cheers
AndrewsuperAndrew | Property Analyser and Finder Tool
https://property-analyser.com.auCorrect- the net yield excludes Mortgage, because all lending situations are different – but they are all at least 2% cash positive.
These properties have been purchased in the last 12 months, (there are others) and are spread across three states in or accessible to regional centres.Really like all of this information, very useful thank you.
I however have a Question
-At the end of the day of positive gearing is it not just have a big enough loan so you make money above what it costs.
Any property can be positively geared? but is then whats truly debatable the percentages on return?and then on another note what are the benefits (bar the return) for a top notch positively geared investment?
Kind regards
Jaxon Avery
Jaxon | Jaxon Avery – Financial Adviser
http://www.jpafinancialservices.com.au
Email Me | Phone MeJPA Financial Services Pty Ltd
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