Yield What Do you Chase?

[brisbane 04]

Hi All,
For a buy and hold what Yield do you chase in the current market conditions? I'm looking for a yield of approx 6.9%.

 

[DaveM]

Minimum 7.5% gross to be considered, unless significant equity can be achieved via reno to offset lower yield.

 

[HiEquity]

8%net, tenant to pay all outgoings including property management, for me. Preferably higher of course...

 

[CHAOS]

Does location matter when considering these yields or low CG?

 

[jim1964]

Ours range between 6.5 to 10%,with all leases requiring all water use and supply charges payable by the tenant.

 

[redwing]

Ours range between 6.5 to 10%,with all leases requiring all water use and supply charges payable by the tenant.

What are the supply charges Jim ?

 

[Ideo]

I don't.

Yield is just something that you get if there is a house on the land before you rezone it .

I do have 3 properties that a +ve geared, but I don't chase them any more. Too much hassle for small gains.

 

[Corey Batt]

8%+ if you can knock it down and sub/develop.

10.5% if a crack den semi, would consider 8.5%+ if own both sides and good block for development.

 

[brisbane 04]

When discussing yield do you calculate just the purchase or do you calculate purchase + stamp duty and solicitor costs in working out your yeild when purchasing.

 

[Ed Barton]

When discussing yield do you calculate just the purchase or do you calculate purchase + stamp duty and solicitor costs in working out your yeild when purchasing.

It's generally accepted that yield is the current rent/dividend and the current sales price. Many here have different definitions of yield.

The most common is the price paid and the current rent. On this definition long term holders might have a yield of 50, or even 100%.

More importantly, how are you going to use the 'yield' figure? Decisions on buying? holding? selling?

 

[brisbane 04]

Hi Ed,
If I find a property that is in a good position,is in good condition and has good long term growth prospects I would like to keep it for a long period of time. These type of properties also appeal to others as well including other investors and people who want to purchase a home to live in. The price usually reflects this. With the current low interest rates and low vacancy rate in the city I'm interested in what yields people look at to feel comfortable given that at some stage interest rates will rise. I like 7% because hopefully interest rates wont reach this mark for the next few years and hopefully I will have some capital growth in this time including rent rises. I look at rent vs purchase price to calculate yield. I've usually purchased, done renovations and rented out the property and kept the property for a period of time usually having to support the property out of my own back pocket. I've had to count on the renovations done to the property to have capital growth. Recently bought a property for purely a flip, did renovations kept it for a year and sold it for a profit. Also just finished a subdivision which although took a while was worth it. Different strategies for different properties. Im nowhere near experienced in any area so just keep looking and trying different things.

 

[MTR]

Hi Brisbane
My focus is around the 7%+ depending on what I can do with the property. I look at properties which I can develop down the track or where Councils are in the process of rezoning so I can pick them up cheaper.

I have now found a very depressed market where investors are offloading their very desirable stock, 2 and 3 units on one title, I know these properties would never have hit the market 12 months ago, good cashflow and potential to strata down the track. These yields are around 7-7.5%, but its what you can do with the land later which I really like.

Cheers, MTR

 

[jim1964]

What are the supply charges Jim ?

The quartely supply charge SA water issue in the bill,Cost depens on which house we are talking about.Section 53,part 2 (B),allows this to be charged if it is written into the lease.

 

[nhg]

I look for 7-8% gross
Calculated [(rent*52) / (total costs incl. stamp duty, reno and legal)],
however must also have:

a) potential to realise immediate capital growth through renos;
b) ability to increase yield through granny flat or something else in the near future.

So when rates go up I can throw a GF on and hit the 10% return on (total costs). Unfortunately I can't find all that many

 

[Truly Exotic]

Always calculate yield on purchase price, no,point buying a property worth 200k,,financing 20k an getting a rent of say 100 per week, and claiming yield of 25%

The absolute worst yield I would go for is 7.5 but it would have to,have other potential,

I have no average about 8.4% yield across my portfolio

 

[thatbum]

Wow everyone seems to aim pretty high in terms of yield.

No one really willing to risk neutral/negative cashflow on here?

 

[DaveM]

Wow everyone seems to aim pretty high in terms of yield.

No one really willing to risk neutral/negative cashflow on here?

There are plenty of mum and dad single IP investors out there with their single -$1000 per month property that "the tax man pays for"

 

[lizzie]

Hi All,
For a buy and hold what Yield do you chase in the current market conditions? I'm looking for a yield of approx 6.9%.

Prefer minimum 8% gross atm, so that net is nothing less than neutral.

If interest rates go up, then I'd be looking for higher yield.

 

[jim1964]

Wow everyone seems to aim pretty high in terms of yield.

No one really willing to risk neutral/negative cashflow on here?

Nope,we are all greedy.

 

[Noodle]

Yield certainly isn't everything, and often the higher yielding investments are so at a cost. I.e Niche market, like student accom', granny flats, in areas where sharia law is prevalant or sometimes its just because their more regional.

It is however very possible to get gross yields of 7%+ in areas with strong fundamentals and growth drivers a plenty.

Yield keeps you in the market, capital growth helps you to keep on buying.