Block of 4 units for $350,000 rent $800 - $900pw 12.5%+ yield.

[sash]

Yes.....unfortunately....it is true......

The real tears when it comes to sell.

I agree about the Gold Coast, Sunshine Coast, and Cairns have a lot of 10% returns. Cairns as Eternit mentions has very high rates and strata. What looks like a good deal can be not so good particularly on strata properties.

I am more in favour of the Gold Coast as the Commonwealth games being hosted there has some promise....though I think there is plenty of time to get in.

Unfortunately it called "hero workshipping", can sucker the best of them

 

[mflying]

I've found a few 11% deals in regional towns, some in one horse towns, some not so one horse towns, and that's without too much trouble. Sometimes I get agents call me and offer a block with 9.5 to 10% deal, however, they don't really fit into my personal investment strategy so don't usually pursue them

Couple of questions in regards to yeild.

When one posts for yield, does it include,

total purchase price
stamp duty
LMI
Rates
PM fees
Insurance
repairs

when i do my calc for yeild, i include above and number comes back to around 5.80 to 6.10%.

P.S I still have L plates on when it comes to PI.

 

[Propertunity]

Couple of questions in regards to yeild.
When one posts for yield, does it include,...

When one posts for yield, one should qualify buy saying it is either gross or nett yield.

I think most here post 'gross' as 'nett' will depend on too many variables such as the IR paid, deposit put down, PM fees or self managing etc etc.

 

[jim1964]

When one posts for yield, does it include,

total purchase price
stamp duty
LMI
Rates
PM fees
Insurance
.

To be realistic,YES.Take off the costs and you are nowhere near the yeild.Its then a false economy within yourself.

 

[mflying]

To be realistic,YES.Take off the costs and you are nowhere near the yeild.Its then a false economy within yourself.

Why don't ppl post NET yields??

After all, one of the purpose of this forum is to share knowledge, not about making yourself look good, is it?

 

[Aaron_C]

Why don't ppl post NET yields??

After all, one of the purpose of this forum is to share knowledge, not about making yourself look good, is it?

Because every person's net yield is different as they have different borrowing rates. You can easily work it out.

 

[Ed Barton]

Why don't ppl post NET yields??

After all, one of the purpose of this forum is to share knowledge, not about making yourself look good, is it?

Net yields are so subject to personal circumstances.

None of my properties have an LVR above 0%, i have net yield of, let's say 5%.

Another investor with 100% LVR will have a net yield of - 2%, on the same property.

My property could be twice as bad as the 100%LVR person and still look ahead on this metric.

Net yield before income tax and interest is probably a good one.

 

[Ed Barton]

Why don't ppl post NET yields??

After all, one of the purpose of this forum is to share knowledge, not about making yourself look good, is it?

Another age old question here is, should you use the purchase price, or the current valuation when working out yield?

 

[jim1964]

Why don't ppl post NET yields??

After all, one of the purpose of this forum is to share knowledge, not about making yourself look good, is it?

Good comment.....!

 

[TingTong]

Another age old question here is, should you use the purchase price, or the current valuation when working out yield?

Some people like to use the purchase price but I think current value is more accurate because it reflects the opportunity cost of using the sale proceeds to invest in something else. The most accurate would probably be current value less selling costs.

 

[ozmale42]

Another age old question here is, should you use the purchase price, or the current valuation when working out yield?

Depends on the purpose.


If you're comparing the return on a given investment against the likely return on alternative uses of those funds, then purchase price is the most relevant.

However, if your'e looking at selling and getting into a new venture you'd probably be more concerned with market value.

Yields on purchase price assesses past performance. Yields on market value assesses future decision making.

 

[willair]

Another age old question here is, should you use the purchase price, or the current valuation when working out yield?

Or look at it in very simple terms,what happens in between is never that important when looking back while going foward only the sold after tax price that you sell it for..

 

[eKwatee]

I do believe the yield should be calculated after all costs associated with buying have been added or at the very least, stamp duty, transfer fees and solicitor/conveyancing costs. As this figure is the actual dollar amount spent to get into the investment.

 

[mflying]

I do believe the yield should be calculated after all costs associated with buying have been added or at the very least, stamp duty, transfer fees and solicitor/conveyancing costs. As this figure is the actual dollar amount spent to get into the investment.

+1

This is how i calculate my yield:

Purchase Price: $100000
Stamp Duty: $2000
LMI: $1500
Solicitor Fees: $1000
Other fees: $500

Total Purchase Cost: $105000

Weekly rental: $100 p.w. X 52

Total Gross rent= $5200
less PM fees, Council Rate, insurance, Repairs Etc

Total net rent= $4000

NET YIELD: Total Net Rent ($4000)/Total Purchase cost ($105000) * 100 = 3.80%

Tax for -/+ not calculated
(all numbers are assumed)

 

[Brady]

Everyone is going to calculate Yield a different way.

As long as someone tells you how they calculated it doesn't really matter.


Now Nathan care to share more details of this purchase?

Any other links besides one to your facebook which doesn't let you look at?

Much appreciated.

 

[oracle]

Everyone is going to calculate Yield a different way.

I think the only way to calculate is if you assume putting the same amount in the bank term deposit. If I put in $100,000 in a fixed deposit with a bank at 5% pa. I expect at the end of the year after all costs are deducted ( In this case probably none) to have $105,000.

So if I use the same $100000 to invest in property after all expenses are deducted how much is left over should be used to calculate the yield. So basically the net yield (before tax) is what should matter at the end of the day when evaluating an investment.

Cheers,
Oracle.

 

[Terry_w]

Depends if they're on one title or not. If they're stratated then they would be assessed as 4x100k units for stamp duty.

What about the aggregation rules?

Rather than stamp duty on $100,000 times 4 they are likely to be assessed on $400,000 (even if separate titles and 4 separate contracts).

 

[Terry_w]

What about the aggregation rules?

Rather than stamp duty on $100,000 times 4 they are likely to be assessed on $400,000 (even if separate titles and 4 separate contracts).

I see Nathan bought in QLD. Aggregation rules apply there too.
s 30 Duties Act
http://www.austlii.edu.au/au/legis/qld/consol_act/da200193/s30.html

 

[tonyc]

The yield calculation stuff is fine when making comparisons but personally, I think that is missing the point of Nathan's post - which is that great deals are available.

I read his post, and thought, I'm going hunting.

Thanks Nathan, you inspire and motivate (some of) us.

Regards

Tony

 

[starter]

I see Nathan bought in QLD. Aggregation rules apply there too.
s 30 Duties Act
http://www.austlii.edu.au/au/legis/qld/consol_act/da200193/s30.html

I stand corrected.