Hi Experts,
A 10%-20% capital growth, below 2% vacancy rate and gross yield of 6%, house with land looks good. Does such properties exist? Lot of BAs tell me that this is not possible and one cannot have both cap growth and high yield.
If such properties exist how to locate them?
Thank You
SanYou can have both capital growth and yield. 10%+ per annum is pushing it especially with most of the markets in Australia at the moment. If you want strong yields and equity from the get go. I’d be looking for a buy renovate and hold strategy.
Thanks Tony
Tony Fleming | Triumphant Property Group
http://www.triumphantpropertygroup.com.au
Email MeNSW Buyer's Agent specialising in Western Sydney-Blue Mountains-Orange-Albury
Hi San,
A 10%-20% capital growth, below 2% vacancy rate and gross yield of 6%, house with land looks good.
At different times in a market, I am SURE those parameters apply – but likely not ALWAYS. Most generic growth in real estate markets occurs in a stairway pattern – a level period (even declining somewhat, then a huge rise in a short time). Many factors come into it, with finance and the economy both playing a huge part, but so too does Govt legislation, world factors, over-building of new properties, under-building of new properties, etc, etc…..
Have a read of the very first post of this link – there you will read of an experienced investor who once was not experienced, and she talks of her path and how today she can make money in ANY market.
https://www.propertyinvesting.com/topic/4410491-the-big-picture-for-new-readers-especially/#post-4410491Then, about halfway down the page, read of Darryl who “manufactured” Equity via renovations. He started with low cost, positive geared properties needing renovation, did the renos to gain value and a higher rent, then borrowed against them to buy the next one. Rinse and repeat !!!
As Tony says, a 10% yield is “pushing it” right now – mainly because values have risen, while wages have not!!! So the average person/couple can’t afford a high rent, nor their first home. Rents therefore stay low, and with Interest Rates being low, investors can keep Rents lower without pain. If (sorry, make that WHEN…) Interest Rates rise again, watch for the yields to rise too. For now, you don’t NEED 10% yield to have a +ve geared property.
Benny
thanks all.
I always come and stop at the point of decision – where to buy and how to identify the positive cashflow property.Is there a logic or method to evaluate the LGA, Suburb, street to identify the property?
I generally us the historical data to find growth and look at the current properties at market for rest to evaluate yield. I use approved govt development planning/population forecast in the area to look at growth prospects and demand in future.
regards
SanIt sounds like you may be suffering from analysis paralysis. What are your end investment goals? Do you want passive income from rental properties or sell down and live off the equity you created?
Finding positive cash flow property is easy at the moment, thanks to interest rates at the moment. It’s just making sure it’s a sound investment long term. As you said you want capital growth and low vacancy. Plenty of good markets to invest in just find the one that suits your goals.
You’ve pretty much got it covered in the research aspect. I’d just talk to local residents, other selling agents, property managers and other local investors to get the best knowledge of the area. Look at infrastructure projects, job growth and tourism expansion.
Hope this helps!
Tony Fleming | Triumphant Property Group
http://www.triumphantpropertygroup.com.au
Email MeNSW Buyer's Agent specialising in Western Sydney-Blue Mountains-Orange-Albury
Sub 2% vacancy – easy
6% gross yeild – not quite so easy but may be possible – do you mean for houses only or include units?
10-20% cg – no one can guarantee this. There are plenty of indicators for potential growth that can be measured but I never promise.More info about your brief, your goals, and your willingness to do things to achieve this outcome are needed. Most of the properties I have bought for myself or clients that ticked all these boxes were problems. IE they needed some cosmetic work, or they were in rough but gentrifying areas, usually both.
BuyersAgent | Precium
http://www.precium.com.au
Email Me | Phone MeSouth Coast NSW Independent Buyers Agent - Wollongong to Batemans Bay and Regional NSW. DOWNLOAD OUR FREE 14 POINT PROPERTY BUYER'S CHEATSHEET to avoid painful mistakes at precium.com.au
Regardless of all the other figures, 10-20% cg consistently is completely unreasonable in the current environment. Sure you can get this in short spurts, but you’re not going to be able to trend long term with those sorts of growth rates, its not sustainable indefinitely.
6%+ yields certainly possible, generally you will see this in regionals, outer suburbs of Adelaide and Hobart.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
One of my clients has purchased 2 psotive cashflow properties in innner Sydney. One doubled in value within a few years and was cashflow positive from day 1.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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