Rather than look at the numbers for what they are, this is what you come back with...? Plenty of people buy at these yields and lower and indeed most metropolitan auctions sell far below these yields. That's why the market is overvalued and not sustainable because the overwhelming majority of auctions (by value) yield even less than my simulation exercise.
Given that most people don't invest in property, and of those who do, most only ever own one and often sell it, this would explain why so few people do well out of property investing.
People who go on to own more than 5 IP's - which is around 2% of property investors - don't do this sort of investing with the numbers you keep trotting out.
Also please don't use a 2003 purchase price to calculate your yield based on current rent. Why don't you use something purchased in 1998 and tell me what it's yielding now while you're at it?
Absolutely I will mention 1993. The return I receive is always going to be based on what I put into an investment at time of purchase.
I have to look at what return I'm getting on the dollars I invested, not on what someone else would get if they invested in that same property today. I didn't buy it today.
If you look at my purchase yield, it was a shabby 8.4% by the way.
What I love about forums is that I never talk about what I own or what I'm doing, because there're always people out there (including on this forum) doing much better than me, much more than me. So if you're going to talk about a $220k property yielding 6.3% from which I have a lot to learn from, then with all due respect, maybe think again?
It may be yielding 6.3% at today's prices, but I wouldn't buy it at today's yields. As per above, I bought it at the yield of 8.4%.
That's allowing for 5% purchase costs on top of the purchase price of $105k, divided by the rent of $180p/w x 52 weeks.
By the way, I helped you calculate your current yield based on your $280 rent and $220k market value. Chuck on stamp duty it does around 6.3%. Just in case you didn't realise since I know you're all so attuned with manipulating numbers (ie 2010 rent / 2003 price)
If I buy a property today, the rental yield I will look at is based on that price. If it is no good, then why would I buy it?
Therefore, why would I look at today's rental yield based on today's purchase price, but bought in 2003?
Noone is going to buy any property today, but want to look back on what the rental yield was in 2003 to determine it's return.
So, the purchase figures (number crunching) will always be based on today's purchase price, and today's yield.
This is why, with every property I own I calculate what my return is now based on what I paid for it.
As anyone who owns Google shares bought in 1990 of their return on their investment today is cr@p.
