Yields in Sydney

[skater]

Of course, when 5 of them double in value (which will happen due to low yield, high growth), you just need to sell 2 to pay off the other 3.

Really? But didn't you say we have mortgage stress and ecconomic downturn?

You say "when 5 of them double in value" and then you say "which will happen" which means they have not done that as yet. If you lost your job today, could you survive?

Remember, I said today, not some distant time in the future, which may or may not eventuate. Today!

And, for what it's worth, mine will also double, but I'll get the high yeild to go with it as well as a much lower land tax bill. Like I said, I could hold onto my entire portfolio without the need to sell any at all. The best of both worlds.

 

[Deltaberry]

Really? But didn't you say we have mortgage stress and ecconomic downturn?

You say "when 5 of them double in value" and then you say "which will happen" which means they have not done that as yet. If you lost your job today, could you survive?

Remember, I said today, not some distant time in the future, which may or may not eventuate. Today!

And, for what it's worth, mine will also double, but I'll get the high yeild to go with it as well as a much lower land tax bill. Like I said, I could hold onto my entire portfolio without the need to sell any at all. The best of both worlds.

If I lost my job today, I'd probably semi-retire and transition to retirement by 28. But I'd be worried I'd be too bored.

In other news, remember - high yield equals low growth, which would mean yours might not double as fast as the low yield high growth ones. Hence it may not be the best of both worlds.

 

[skater]

If I lost my job today, I'd probably semi-retire and transition to retirement by 28. But I'd be worried I'd be too bored.

In other news, remember - high yield equals low growth, which would mean yours might not double as fast as the low yield high growth ones. Hence it may not be the best of both worlds.

High yield does not always equal low growth, the same as low yield does not always equal high growth.

You were the one talking about mortgage stress and the likelihood of reduced rental returns. This is more of a risk in the areas where you are getting a 2% yield.

It's obvious that you are trying to be argumentative. I'm bored of your games, so I won't be responding.

Good luck with your very low yields, I think you may just need it.

 

[Deltaberry]

Should I add low yields don't matter when you borrow at 2%, as some jurisdictions would demonstrate. But anyway, thanks for your best wishes.

 

[Belbo]

Should I add low yields don't matter when you borrow at 2%, as some jurisdictions would demonstrate. But anyway, thanks for your best wishes.

You BORROW at 2%? HTFDYDT???

 

[travelbug]

Of course, when 5 of them double in value (which will happen due to low yield, high growth), you just need to sell 2 to pay off the other 3.

Really??? Like in Sydney for the last 8 years???

Do you really think it is that black and white?

I have several properties that defy that myth.

--
We just bought 3-1-1 fibro ex-housie for $220k that was renting for $270 per week, place looks and smells terrible and was on the market for 3-4 months originally asking $260k. We're doing a $15k reno (kitchen, floors, paint inside and out, tidy the front lawn and gardens) and should get $340+ pw. A 4 bedder 2 doors down the road with original kitchen and bathroom is rented for $360 by the same PMs.

I think you are being optimistic with your rental expectations. What makes yours better than the 3 bedroom ones renting for $300pw?

Which agent? $360 is a lot.
I need to put my rents up again I think.

$15K for kitchen and paint? Are you paying tradies to do it?

Would like to hear where it is. I have a couple in 2770. Renoed ourselves.
We are doing similar things to you. After reno CF neutral or slightly positive (calculated with ALL costs) and increased equity.

 

[vaughan]

I think you are being optimistic with your rental expectations. What makes yours better than the 3 bedroom ones renting for $300pw?

Which agent? $360 is a lot.
I need to put my rents up again I think.

$15K for kitchen and paint? Are you paying tradies to do it?

Would like to hear where it is. I have a couple in 2770. Renoed ourselves.
We are doing similar things to you. After reno CF neutral or slightly positive (calculated with ALL costs) and increased equity.

Well, hopefully not too optimistic with the rent. $340 a week is near the top end but not crazy. I think we need $330 to be neutral but that's not taking all costs into account. Time will tell.

The $15K budget includes some tradies, but mostly our time. The whole house is on just one power circuit so we've included some money for more wires to be run. My wife is project manager so everything is listed with an estimated time and budget and is worst-case rather than optimistic. I just bought a used but like new kitchen sink for $10 and a laundry tub for $86 off eBay so we're ahead already.

This is our first IP so we're trying hard not to fall into the traps and are really trying hard to keep costs reined in. (Won't be buying too many $4,000 dining room lamps.) However we're buying Bunnings flat-pack kitchen despite the fact that others may be cheaper. At least we haven't jumped-in and just bought to negative gear.

BTW regarding laundry tubs: those things are practically a hard currency. They sell used for nearly full retail. Better than gold.

 

[Thesnowyforest]

Yields in Hurstville are around 5%.

But keep in mind rent goes up each year. So the property gets easier and easier to hold. 4 years or so and your neutral.

So to give you a real life example, i rented my 2 bedder in Hurstville out in January 2008 for $260 per week. Fast forward to 2011 and i now rent it to the same tenant for $360. I am yet to spend a dime on the place.

When this tenant leaves i will do a quick paint and carpet change and estimate i will get approx $400 per week.

Only reason i havent kicked this tenant out to get $40 extra week is they are soo awesome and zero maintenance !

Hope this helps.

 

[Deltaberry]

You BORROW at 2%? HTFDYDT???

I could in certain circumstances, which would be very easy to facilitate. Of course there's other catches to it but I won't go in to that.

 

[Bargain Hunter]

I never buy with more than 2% yield.

Remember, low yields equal high growth. Learn some bond pricing theory peoples.

I've always been interested in low yield high capital gains but have been unable to convince my wife.

Where do you find such low yielding property? I've been looking but the best I've been able to find was around 3%.

Are you calculating your return on a rental return of 3%, or do you include other costs such as rates, land tax and depreciation?

Do you include negative gearing within the return calculation?

Regards

Andrew

 

[travelbug]

My wife is project manager so everything is listed with an estimated time and budget and is worst-case rather than optimistic. I just bought a used but like new kitchen sink for $10 and a laundry tub for $86 off eBay so we're ahead already.
This is our first IP so we're trying hard not to fall into the traps and are really trying hard to keep costs reined in. (Won't be buying too many $4,000 dining room lamps.)

Yes. Ebay is your friend. We bought all our lights for Whalan from a guy who was demolishing his house. He said he paid $70 each for them. Next one we just bought bunnings ones. He just happened to have a near new laundry sink. Our best buy was a full bathroom for $50. The house was being demolished that weekend and the previous buyer didn't turn up. We only took the toilet, vanity and shower screen. Hubby broke the toilet getting the concrete off. But $50 for a vanity and toilet. We're happy. We bought a few kitchen sinks. One was complete with taps. New $15. At one stage we had 4 vanities in our garage.

However we're buying Bunnings flat-pack kitchen despite the fact that others may be cheaper.

Why??? Why would you buy flat pack budget kitchen when you can get one made up and better quality for less money?

This was my first Whalan Reno if you care to look. Learned a lot on that one. It's definitely a learning experience. Each one brings up new challenges. Surely there is a good book with all the things you'll find and how to overcome obstacles. Maybe I should start writing one?

http://www.somersoft.com/forums/showthread.php?t=64889

Whole thing was $14,500.

New kitchen, bathroom, laundry. Remove linen press and half wall. Install stud wall. Built in wardrobe. Carpet bedrooms, polish floors. We did a lot of the work. 5 weeks. The first 2 weeks was just getting rid of the wallpaper and nicotine.

 

[ali]

The rents in Sydney west and outskirts are going gangbusters and the vacancy rates are still tightening. We are settling on Monday on a completely renovated place in a commuter suburb of the Central Coast. Cost: $240k. Rent: $320 and the tenant is going to pay 12 months in advance! We could have got a higher rent but I wanted it tenanted quickly.
I am not an expert at property investment by any means, but I can't see the rent situation getting worse (for landlords) while new housing starts are so low in Sydney.
Cheers Ali

 

[not happy]

I never buy with more than 2% yield.

Right, so you are happy to pay $750k to receive a weekly rent of $300? 'That's 2% yeild. Yup, fantastic bargain that one.

Of course, when 5 of them double in value (which will happen due to low yield, high growth), you just need to sell 2 to pay off the other 3.

Sheesh! You must be saving a lot of tax to be holding 5 of them with numbers like that, huh? Buddy, that's not called investing, that's called gambling.

If I lost my job today, I'd probably semi-retire and transition to retirement by 28. But I'd be worried I'd be too bored.

Yeah, OK. You could semi-retire with 5 super loss making "investments". Somehow I think someone's telling porkies.

 

[Deltaberry]

How are you not happy? Why are you not happy?

 

[DaveM]

If its not at least 6.5% I dont bother.

 

[vaughan]

I never buy with more than 2% yield.

Remember, low yields equal high growth. Learn some bond pricing theory peoples.

IMHO a business model that relies solely on capital growth to cover holding costs AND generate profit is gambling. Negative gearing is the free bus ride to the casino.

The only advantage that such "investing" has over, say, blackjack, is that the losses can be claimed as a tax deduction.

Yeah, yeah, I feel like a troll tonight...

 

[not happy]

Yeah, yeah, I feel like a troll tonight...

To eat for dinner?

Don't worry! It's not you who is the troll.

 

[Deltaberry]

Hmm do I hear some 2-month come, 2-month gone people talking? I'll try remember their names.

With 30 posts, I've counted 2 useless ones on just one thread.

 

[coastymike]

Its easy borrowing at 2 percent but you either carry the exchange rate risk and as many farmers in the 1990s found out can send you under or you insure against the exchange rate risk which brings the rate pretty well up to the commercial aussie rate. If it was easy lots of high net worth people would be doing it and they arent

 

[vaughan]

Quick update: just signed a 6 month lease for $360 per week on Monday. Tenant was ready to move in before we finished the reno so effectively no time waiting for us. Place will probably be cf +ve without taking depreciation into account.

We managed to keep the reno (new kitchen, polish floor, new paint inside and out, quick update of bathroom) under $15k but blew the "time" budget (I'm a contractor so put some jobs on hold).

As for the area, we've met the lovely families in houses either side and went to backyard bbq party at the house opposite. House on one side is commission but current tenants have seen what we did to our place and now decided to buy theirs off the gov and do it up themselves!

Lynne from these forums came around and visited early on (take a look now!) gave some great advice -- the big mirror in the bathroom looks great.

So am I in the "Western Sydney +CF Club" now? Meetings at Rooty Hill RSL I assume... LOL