Yields simply too low to warrant buying

[Purple Property]

Looking through properties to purchase on trademe and visiting open homes, talking to agents etc I can only put together 6% ish yields in less desirable suburbs in regional towns of the north island.

Working with the banks lending criteria of P&I on 25 year terms, we?d need 11% give or take to break even on lending so I?m needing to put in 50% deposit into a property to make it cashflow break even in the banks eyes.

How on earth are people growing their portfolios in this day and age!?

Makes sense to simply pay down debt or invest elsewhere (index funds) as the numbers simply don?t stack up anymore

Thoughts?

[Jeffa]

Looking through properties to purchase on trademe and visiting open homes, talking to agents etc I can only put together 6% ish yields in less desirable suburbs in regional towns of the north island.

Working with the banks lending criteria of P&I on 25 year terms, we?d need 11% give or take to break even on lending so I?m needing to put in 50% deposit into a property to make it cashflow break even in the banks eyes.

How on earth are people growing their portfolios in this day and age!?

Makes sense to simply pay down debt or invest elsewhere (index funds) as the numbers simply don?t stack up anymore

Thoughts?

Its because your strategy is wrong, you could pay someone on property talk $10,000 to educate you on how it is done however you would most likely be making them richer,
Its not rocket science you need to read books on property investing or study online.
We have been living in the information age for over 2 decades now, what have you been spending your time online doing ?Making money or making friends.

[PC]

Just rally all your mates to vote Labour/Greens back in.
They are doing fantastic work to push rents up as fast as possible.
The clueless tenancy advocates are happy, the lefty nutters are happy, the landlord are making a fortune and the tenants are shafted.

[Anthonyacat]

You can pretty easily get 5% yields in Auckland. I haven't looked, but would expect the less desirable areas in regional towns would be at least 7-8% gross. Or are you talking net yield?

Consider that back in 2012 an 8-10% yield was pretty good, and interest rates were almost 6%. Now interest rates are approaching 2%, perhaps 4-6% yields make sense now? It's a thought I have trouble with personally, and go searching for higher yield elsewhere - recently invested in a couple commercial syndicates at 8% and 10% respectively. Will see how that goes.

[AlFa]

Looking through properties to purchase on trademe and visiting open homes, talking to agents etc I can only put together 6% ish yields in less desirable suburbs in regional towns of the north island.

Are you counting it right? I've got a brand new house in top Rotorua suburb which I'd say rather unsuitable as a rental as it's too expensive yet it's still 5% gross yield. My Rotorua rentals are anywhere between 6 to 7% GY against current market value. My Auckland dual income is 5.5% GY

[Purple Property]

Its because your strategy is wrong, you could pay someone on property talk $10,000 to educate you on how it is done however you would most likely be making them richer,
Its not rocket science you need to read books on property investing or study online.
We have been living in the information age for over 2 decades now, what have you been spending your time online doing ?Making money or making friends.

When you say the strategy is wrong do you mean the buy & hold strategy (i.e. flip instead?) or the strategy of not finding high enough yields?

[Davo36]

When you say the strategy is wrong do you mean the buy & hold strategy (i.e. flip instead?) or the strategy of not finding high enough yields?

I think Jeffa was just sort of making some incoherent ramblings there.

[Jeffa]

I think Jeffa was just sort of making some incoherent ramblings there.

I shall not disagree with this comment.

[Jeffa]

When you say the strategy is wrong do you mean the buy & hold strategy (i.e. flip instead?) or the strategy of not finding high enough yields?

Your over analyzing.

If the numbers don't work, make them work.

Your first investment should break even, remember it's an investment not a get rich quick over night scheme.

City 3 to 4% yield and average 5 to 7% per annum capital gain over 10 years
Small town 7% yield and 3% capital gain per annum over 10 years
Index funds 8 to 11% per annum growth and dividend over 10 years.

Like I said it ain't rocket science you just have to do it.

That will be $10,000 plus gst please. (Opps did I just upset all the property gurus on here)