Yes I think with any investment that does not show a sustained history of capital growth, the best time to sell is when the rental yield is at its highest because the opportunity is unlikely to come again in the present lifetime.
That story was of a mining town with volatile rents, so pay little attention to that as a normal indicator for Resi.
Stories about folks paying $2k per week are nowhere near the normal life in this Country. Most folks don't even earn $2,000 p/w; let alone pay that much in rent. Personally, I wouldn't even buy in a place such as that because the very level of rent would suggest the returns are unrealistic over the longer term....you would need to look at the average rent return and what the buy price of the property is, first.
For the majority of Resi - and probably most well located Comm - the rents don't fluctuate much.
We have only ever owned well loacated Resi, and the rents haven't ever gone down - only slow growth for some of the time or consistently up as the market demand decided.
Our current IP in Kalgoorlie is case in point. Rent at purchase was $180p/w back in 2003. Now it is $310. The market there is dead quiet at the moment, and we originally had it at advertised at $340 after I did the reno on it in June, 2013.
So despite the prolonged slump, a drop of $30 p/w only. By next lease renewal it quite possibly could return to the $340 p/w predicted.
Originally Posted by china View Post
Still cannot buy 30mil of property earning only 1 mil pre tax a year.
Seriously.
"ONLY" $1 mill pre tax?
That is a very, very small world of folk you refer to here in Aus.
With an income like that, and an ability to source CFPAT (Cash Flow Positive After Tax) properties would make it so easy to accumulate enough IP in 10 years with a passive income big enough to live off it would be scary.
All a person needs to do with a $1mill pre-tax income is live like a bloke on $100k gross, re-invest the remaining unspent income into IP loans, reinvest the tax returns into the investments as well, and keep repeating the whole process of buying similar IP's as soon as the next deposit is saved up, or equity is available - bigger loans makes it harder to find CFPAT though, so a cash deposit would work better.
Assuming you start with say; a 5-15 year old property worth about $350-400k (maximising on-paper deductions), and repeat that each time, you should cream it within 10 years without raising a sweat.
If you went for value-add projects etc instead, the result would be accelerated even more; most likely. This requires way more input though.