What is the worst yielding property you have seen advertised?

[mmerlin]

Browsing the latest listings on the realestate websites, as I tend to do on an afternoon, I found a property at Hill End in Brisbane, one of those POA, no price listed, so after emailing the agent to ask for price and current rental prospects I was flabbergasted to learn it would return a measly 1.4% gross yield!

Dornoch Terrace, Hill End
"offers above $1million"
Queenslander split into 2 units
renting at $130 and $150 per week.

http://www.realestate.com.au/objects/props/7915/101137915al1067521980.jpg

My thinking is:
- the vendors are asking too much
- if someone buys this they have more money than they know what to do with

Admittedly I didn't ask the agent if there is any kind of subdivision or development potential.

With yields like this, you need a bucket of money to buy/hold and/or develop the property, and being priced above $1million it doesn't seem like there would be much potential CG upside left.

Can anyone imagine under what circumstance it would make sense to buy such a low yielding property?

 

[always_learning]

Even if you paid cash and owned the property outright, the $13K would be consumed by agents fees, council rates, water rates, repairs, vacancies etc.

Would a new super-delux $500K designer house result in a $1.5M+ PPOR for some lucky person

 

[see_change]

Some Friends proudly told us they've bought an IP .

It's got a return of 0 %. actually negative once you include rates etc , not sure if they borrowed to buy it ... that would be another concern )

It's a block of land , and they're not going to build anything as they don't want the hassels of tenants.

See Change

 

[ocean view]

worst yields

Sea change There are many of us out there who hold these types of properties.

mmerlin try this one a -7.5% yield for 6 years.
1mil land purchase with no contruction for 6 years.
I know many in this situation. But I guess we always understood the situation we were getting into. Before we purchased.

As many posts previous . If the CG is good & you can hold the short term pain for long term gain.

cheers
ocean

 

[Ace in the Hole]

Hi mmerlin

I saw a house at Taren Point Sydney advertised on realestate.com.au not long ago for +860k I think and they even mentioned that it was currently rented for $230 a week. This would be the same as your case of 1.4% yield.

I really wonder why they advertised how much it was renting for.

Regards

Adrian See

 

[Peter_Tersteeg]

Six weeks ago I walked past an auction of a small block with 2 units opposite the St. Kilda botanical gardens.

The units recently had a reno and given their size would probably attract around $240/wk each.

The bidding was at $1.2Mil when I left. The land value probably made it worth the price (on comparison to some of the houses in the area), but you'd have trouble getting permits to pull down the block and build your dream home.

 

[OPM-addict]

This sounds like a new section is needed for threads.. The pig of the week?

I wonder if the Admins will put it up.

The pig of the week.
(Even through I think pigs are cute and have many different uses when they are slaughtered.Bacon, ham, pork chops and hot dogs.)

Or a better one is Cattle Fodder? Where the herd graze.

Any other suggestions?

I haven't found one as bad as the previous posts but one came out at 2.3% yield . The REA was trying to get me to buy it. But alas I knew the numbers.
Lucky for him he found a fool with a lot money. They soon were parted.

Have a happy apssive income day,

Respect, Peace, Out.

OPM-addict

 

[Jacque]

OPM,
Don't forget that, whilst important, yields are certainly not the only factor in a good investment. Capital growth is king! Without it, you can't draw down on the increased equity to fund further investments.
If you can afford to hold a property comfortably (even if the cashflow is negative in a big way) knowing that cg will occur and reward you over time, then there's nothing wrong with it.
Everyone is different and invests for differing reasons. Some have to maintain a certain yield in order to be able to financially hold on to the property, whilst others can negatively gear several purchases quite easily.
Some of us like to have a mixed bag of both, to "balance" out our portfolio.

Mind you, in the current market, I agree that it's increasingly difficult to locate yields over 5%, especially in Sydney. Once upon a time, it was a standard return. Now it's sought after and agents boast when they can advertise a property returning 5%.
C'est la vie!