Giddo, your blunt question is similar to asking a surgeon to perform brain surgery with a shovel. You need to get finer and more accurate tools if you don't want to end up with a disaster on your hands.
I've bought CIP with yields ranging from a low of 4.5% nett up to 11% nett. The 4.5% was an absolute bargain given the circumstances, and I think I paid too much when buying the prop yielding 11%.
It depends on so many factors, that to boil your decision down to a simple yield figure is not good, IMO.
Have a squizz at land content / tenant quality / lease wording quality / bond guarantees / lease term lengths / future development potentials / termination clauses / all of your standard demographic stuff.
There is a bunch of stuff to look at, not just the yield.
Thanks Dazz,
As usual you are right in your assessment of my question.
It is probably not possible in a forum such as this to get an accurate answer.
A silly question in other words.
Regards all the other factors, I have already done those investigations, and it looks like this.
I have spent $$$ and hours and am happy that the lease will hold, and deliver the promise $ benefits for min 8 years then an option of another 5 + 5.
CPI rises or 3.5%.
Property is 4 yrs old so gives good deprec benefits. property is classified "residential" for council and also for lending purposes.(accomm building)
ALL outgoings paid by tenant.
On Heron todd Whites finance valuation, I will get return of 6.3% on purchase price, if purchase price is same as their finance val.
I will put in $350k of my own money, and geta return of 4.8% on my investment after I pay interest, and any other costs.
So it is 4.8% nett.
Then there is hopefully some capital gain if I keep it for at least 8 years.
If capital gain is a conservative 3% pa I will get then get a 12.2% return on my investment cash. Nett after intrest and costs of accountancy, etc etc.
After reading of your recent exploits I am thinkin this is a lousy deal
But for me, it looks pretty safe and easy return.
