Saturday, June 27, 2015

Rental yields in Sydney drop like a stone

Cant disagree with this article -

Yesterday in Sydney we were outbid on a property (well it went for more than I wanted to pay) and eventually sold for $692,000 rent was $450pw gross rental yields (3.4%) and that’s before management and expenses $6400 (2.6%) and interest $31,000 (-2%) so basically it would have been costing you $14,000 a year to service.....not bad.....but not great.

Eg if long term capital growth was 8% then its going up $55,000 per year for $14,000 servicing costs but if we have a capital increase flattening as happens at the top of a boom eg 2% per year…..then you are only just breaking even.

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