Rental return percentages
- Thread starter Tanqueray
- Start date
Type in "Loan repayment calculator" to google and you will have plenty to choose from.
or
$500,000 multiplied by 0.07 (7%) = $35000 per year.
Cheers
Rooster
Yeah I'd suggest a loan calculator for Principle & Interest payments
For Interest Only loans, like Rooster said...
If you're using Excel you can use the PMT function like this:
PMT(rate,nper,pv,fv,type)
PMT(0.07,30,250000)/12 will provide you the P&I repayments on a 30 year loan on $250,000 at 7% interest.
PMT(rate,nper,pv,fv,type)
Rate is the interest rate for the loan. eg. 0.07 = 7%
Nper is the total number of payments for the loan. eg 30 = 30 years
Pv is the present value, or the total amount that a series of future payments is worth now; also known as the principal. eg 250000 = $250k
Fv is the future value, or a cash balance you want to attain after the last payment is made. If fv is omitted, it is assumed to be 0 (zero), that is, the future value of a loan is 0.
Type is the number 0 (zero) or 1 and indicates when payments are due.
Nper is the total number of payments for the loan. eg 30 = 30 years
Pv is the present value, or the total amount that a series of future payments is worth now; also known as the principal. eg 250000 = $250k
Fv is the future value, or a cash balance you want to attain after the last payment is made. If fv is omitted, it is assumed to be 0 (zero), that is, the future value of a loan is 0.
Type is the number 0 (zero) or 1 and indicates when payments are due.
PMT(0.07,30,250000)/12 will provide you the P&I repayments on a 30 year loan on $250,000 at 7% interest.
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Thanks Rob!
My understanding of your explanation is that the nper can represent any number of time periods and doesn't have to be a number of years, is that correct? If instead of 30, one was to insert 360 (12month x 30 years) - would the formula have the same effect, save that you don't need to divide by 12 anymore?
I'll have a fiddle tonight and will probably be able to answer my own question
edit...on further thought the answer is probably yes if the interest rate is tied to the time period...ie. when using a yearly interest, use years, when using a monthly interest use months...
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Not sure about "good", but yeah 5% does seem to be "ok" in normal resi stuff
$300k house..... $300/wk= $15,600 pa
about right for where I live
of course, it's not that simple a $10m place won't necessarilty get you $500k in rent either (and ther's lots in between $300k and $10million)
Thanks a lot everyone. I have done my calculations and attached details of my portfolio and would appreciate any comments if anyone has time. I recently purchased property 3 which is already approved for dual occ (property 4). However has not got seperate title. So I included figures for overal (if seperate title is not approved as well as seperate title.
Haven't included property 1 as it is included in divorce proceedings atm so cannot really account for that yet.
Thank you
Haven't included property 1 as it is included in divorce proceedings atm so cannot really account for that yet.
Thank you
Thanks Rob!
My understanding of your explanation is that the nper can represent any number of time periods and doesn't have to be a number of years, is that correct? If instead of 30, one was to insert 360 (12month x 30 years) - would the formula have the same effect, save that you don't need to divide by 12 anymore?
I'll have a fiddle tonight and will probably be able to answer my own question
edit...on further thought the answer is probably yes if the interest rate is tied to the time period...ie. when using a yearly interest, use years, when using a monthly interest use months...
Correct.
If your looking for rental yield look at Joe D reply. BUT working this out for you... it's 5.7% Rental Yield ( This should be lower more like 4.2-4.5% - as your loan amount does not equal your property value)
But in the long term, the value of the IP rental return increase, because your purchase price will remain the same- but rent will go up by inflation....
This does not make sense, an interest only loan does not expire in 30 years.
May be a 30 year loan with say 5 years as interest only, after which it defaults to p&i. This is what mine are however I should be able to speak to the bank and keep them on IO when the 5 years expire.
I've read about a few products with IO for 25 years in the business area.
"Residential Secured 5 year Fixed Term Business Loans"
http://www.canstar.com.au/interest-rate-comparison/compare-residential-secured-5yrfixed-rates.html
