I guess that it was a pointless question as there are as many opinions as people. Those really high yields are generally only available in the much smaller, higher risk locations now. Whangarei is overrun with buyers at the moment and has massive demand from tenants. Agents are telling me of multiple offers on every property they're listing.
Announcement
Collapse
No announcement yet.
Yields in the Provinces
Collapse
X
-
-
Originally posted by JBM View PostSo what's your nett yield after all the costs ? I've found the biggest problem with invercargill is getting a decent rent to match the higher price you have to pay for a good property say 350k 4 bed your be doing very well to get $350pw(seems like you can get many a good property for under $300) ...so 18k gross income ..rates 3k mgmt 1.8k , insure 1.2k mat.... leaving 12k ....90% loaned long term fixed rate 5% ...$15,750 pa so a loss per year $3,750 ....so then your banking on the big Cap gain ..
Now compare that to the southern lakes(2hrs north of Invercargill) ,, seeing properties sell for 500-600k to only a couple of years later command 800K+ ....
In fact, I have funds to go property shopping with and indeed tried to do so late last year but the QL district was too hot for my liking....interestingly, there seems to be a lull at the moment according to a Harcourts email I received yesterday.
For me, investing is not always about chasing capital gains (so your comment about "banking on capital gains" is not relevant to this purchase. Currently with the international share markets swinging, I am happy with my portfolio and the dividends payable. In 25 years we have not come unstuck (touch wood).
Comment
-
There is a lot of discussion of Nett and Gross yields - and lots of numbers flying around. I think for this discussion to really be helpful we need to set dome definitions so the regions can be compared accurately.
here are my definitions of Gross/Nett
> Gross yield = annual rent / purchase price I.e rent $10k purch price $100k Gross yield 10%
variation but different measure
> Gross Yield (at current value) = annual rent / market Val I.e rent $10k purch price $200k Gross yield 5%
> Nett Yield = (annual rent - ALL outgoings) / purchase price I.e rent $10k less rates $1500, ins $500, vacancy $200, mortgage interest $4300, prop man $1000 / $100k = 2%
excluding anything from a Nett calculation is misleading as any real cost will impact any real return.
in Wellington I'm seeing gross yields have dropped from 10+ only 6-9 months ago to more like 6... My most recent purchase was 6.5% gross (yesterday) which at 100% lending and current interest rates is Nett Zero.
Comment
-
Originally posted by Beano View PostAfter allowing all the costs (incl property management and vacancies) would the net yield be 4pc?
Comment
-
Originally posted by Don't believe the Hype View PostThere is a lot of discussion of Nett and Gross yields - and lots of numbers flying around. I think for this discussion to really be helpful we need to set dome definitions so the regions can be compared accurately.
here are my definitions of Gross/Nett
> Gross yield = annual rent / purchase price I.e rent $10k purch price $100k Gross yield 10%
variation but different measure
> Gross Yield (at current value) = annual rent / market Val I.e rent $10k purch price $200k Gross yield 5%
> Nett Yield = (annual rent - ALL outgoings) / purchase price I.e rent $10k less rates $1500, ins $500, vacancy $200, mortgage interest $4300, prop man $1000 / $100k = 2%
excluding anything from a Nett calculation is misleading as any real cost will impact any real return.
in Wellington I'm seeing gross yields have dropped from 10+ only 6-9 months ago to more like 6... My most recent purchase was 6.5% gross (yesterday) which at 100% lending and current interest rates is Nett Zero.
Comment
-
Originally posted by Don't believe the Hype View PostMinz - maintenance extremely low ... What is the cost as a % of rent?
There are no outstanding maintenance issues either....totally in contrast to my other properties (e.g. Dunedin which has had roof recoated, bathroom upgrade, heat pump replacement and now to look at kitchen repairs/upgrade - but its yield is higher and CG seems to be a tad higher (merely good timing though).Last edited by Minz; 18-06-2016, 12:22 PM.
Comment
-
-
Originally posted by Minz View PostMy calculations on 33% tax give 4.39%. Vacancy rate 4 weeks in 6 years, maintenance extremely low. Not all properties are purchased for portfolio growth. Albeit, this one has had a modest gain and is a higher end property.
The explanation for Yields is explained extremely well by DBTH "Don't believe the Hype"
Tax is not part of the calculation
The reason why I use net yields is at a glance we can see if the property is positive or negatively geared
Comment
-
Originally posted by Beano View PostThanks 4.9% gives a profit!
The explanation for Yields is explained extremely well by DBTH "Don't believe the Hype"
Tax is not part of the calculation
The reason why I use net yields is at a glance we can see if the property is positive or negatively geared
If include interest expense to enable comparability between properties you'd have to be consistent with both the LVR assumed (probably use 100%) and the interest rate. No right or wrong way, but I do agree people need to know how the definition of net yield used before a meaningful comparison can be made.
By leaving out interest expense you can easily see what interest rate the property could handle before going negative. I like to aim for 6.5% net at a minimum at present which gives a nice positive cashflow at current interest rates (im around 5% across all mine, dropping all the time at present as fixed come off) and LVR under 80% (also dropping as principle is paid down).
Good quality discussion!
Comment
-
Originally posted by JBM View Postnet yields would be low much like auckland 3-5% etc ...but we do have great Cap gain like auckland
unless you rent per room then you can see higher numbers
Great capital gain has happened in recent past but if anything means less likely to experience similar levels in future.
Rodney Dickens did some good research on this last year and it seems to be playing out pretty close to what he predicted:
Comment
-
Originally posted by marklowes View PostNet of everything except interest? Yeah 3% if lucky in most of auckland which is negative even at the lowest interest rates avaliable.
Great capital gain has happened in recent past but if anything means less likely to experience similar levels in future.
Rodney Dickens did some good research on this last year and it seems to be playing out pretty close to what he predicted:
http://www.interest.co.nz/opinion/75...r-it-wont-last
sections selling like hot cakes here sub 200k
Comment
-
Originally posted by Beano View PostWith a full refurbishment no wonder the previous owner is broke!
"House was completely refurbished by previous owners, is broke"
Comment
-
Originally posted by Anthonyacat View PostUnless a town is clearly dying, why would the value of a region significantly decrease proportionally in relation to the rest of the country?
Comment
Comment