As also mentioned I still believe the market still is'nt going anywhere for a while, though interest rate increases could lower prices. So I aint i no hurry atm.

What I'm seeing so far is fairly often returns of ~9% before negotiating, therefore positive geared investments.

From what I'm seeing the sub 1mil market us generally to expensive.

There are much better returns in the 3mil+ market where returns can be quite good if you find a motivated seller. So good that you could retire with one good deal.

An example with nice round numbers (before negotiating**) is:

Price = 5mil

Yield = 450k (9%) Obviously the tenant, industry etc are factors that need be considered as well.

20% deposit = 1mil

Loan = 4mil

Interest @ 8% 320k*

gross income = 130K (there's always other tiddly bits to pay)

So the return on the 1mil deposit is ~13%.

If you have a nice 10yr lease and dont take out any $$, by then you either have and offset account with 1.3mil or a loan of 2.7mil.

Assuming it's leased again at the same return of 450k (hopefully very cheap by then), interest is now 270K @10% thus making ~net income = 180k.

So there's your retirement in 10 years, assuming that it can be released at current rent rates if you got a million bux sitting around. Infact rents need to be 40% cheaper in 10 yrs time for it to break even, even by my conservative standards the risk is'nt all that steep.

*The cost of finance is very important in these types of deals, and here's where having some resi RE can help bring that cost down.

If you have 2 mil of the loan resi secured @ 7% the interest bill is 20k yr less.

**This also makes a big difference in the numbers.

If you can negotiate a price of 4.5mil then interest is 280k (@8%) giving ~nett income of 170k (17% return on 1mil) and looks pretty sweet.

Infact if you borrow the whole lot at this price, it's still has a +ve cashflow of 90k, but I would'nt really consider this option unless you have another good source of secure investment income.

But this is a game where only real millionaires can sit at the table and play where you need to bring a cheque (or cash) of at least one small million to start playing.

API resi "multi-millionaires" with 80% LVR dont have much chance here.

PS these are very broad and round about calculations and assumptions, use at your own risk of bankruptcy.