Yield

From: Felicity W.


Hi everyone
Over time I've heard many times that as a general rule of thumb, for the best, consistent rate of capital growth you should invest 2-10km from a major CBD.
I'm not discussing that point right now, although my own research of the Melbourne market has confirmed that (but not necessarily ALL inner suburbs...)
What I'm interested in is whether or not a similar rule of thumb applies to yield rates - for example, are you likely to get better yields in middle suburbs, for example.
I'm just curious in what others have experienced, or even if there is such a rule of thumb.
Keep smiling
Felicity :cool:
 
Last edited by a moderator:

Sim

Administrator
Reply: 1
From: Sim' Hampel


In general, I've seen that yield rates seem to be inversely proportional to capital growth rates.

That is, the higher the potential growth rate, the lower the yield, and vice versa, the lower the potential growth rate, the higher the yield.

Which also means that in the average suburbs where you get average growth, you also generally get average yields.

Inner ring houses and apartments in Sydney get around 5% rental yield. Ex-Housing trust houses in the Northern suburbs of Adelaide get in excess of 10% yield.

Of course, these comments are very gross generalisations. There are people on this forum who are experts at ferreting out those properties that are in "sleeper" suburbs - ones that are about to boom - and purchase them below value to ensure that not only are they getting high growth during the boom, they are also getting high yields (we're talking 15% type of yields).

Note that I'm measuring yield based on purchase price, not valuation.

Anyway, these people are living proof that you can have good growth and good yields too.

And how do they do it ?

They know their market intimately, that's how.

 
Last edited:
Reply: 1.1
From: Felicity W.


Thanks for this Sim
I've got a funny feeling somewhere along the line I talked to someone who had a property in a country town and was raving about the yield level - that would probably make sense because I doubt there was much capital growth happening there.
I know some of the Melbourne area intimately, a lot more to learn about yet! But I guess if I'm looking for yield, it may be best to start my researching a little further out.
Keep smiling
Felicity :cool:
 
Last edited by a moderator:
W

WebBoard

Guest
Reply: 1.1.1
From: Dave :)


Felicity,

As Sim says, the higher the yield, the lower the growth, generally. The
tricky part is finding the right properties, in the right suburbs, in
the right pockets that offer a reasonable combination of both. I'm
still trying......the best I've found is a yield of 8% in an area that's
grown 100% in the last 7 years - 16% last year. I'm sure there's better
out there somwehere, though...can anyone offer any?

Cheers,

Dave
:)
 
Last edited by a moderator:
Reply: 1.1.1.1
From: Paul Zagoridis


Mt Druitt and surrounds in Sydney's west. Yield of 16% available throughout most of the last 10 years

Jumped 30% in last 9 months and yields are down to 5%

Must be all the wrappers and yield investors

Dreamspinner
Oz Film Biz is at
http://www.healey.com.au/~paulz
 
Last edited by a moderator:
Reply: 1.1.1.1.1
From: Michael G


Paul,

St Marys got hit by a wrapper buying up a huge amount of property a while back the agent even said he was wrapping.

Michael
 
Last edited by a moderator:

Sim

Administrator
Reply: 1.1.1.1.1.1.1
From: Sim' Hampel


On 6/1/01 8:52:00 AM, Peter T wrote:
>Forgive my ignorance, but
>what's a wrapper?

Sorry... I won't forgive your ignorance !

Hit the search button at the top of the page and type in "wrap". You will find many, many threads discussing all about wraps and how they work.

You may also go to the old forum archives and search there for even more discussion.

 
Last edited:
Top