What Yield are You Getting?

8% in Swords?

I would be a lot more surprised about the Swords number. Doe this mean that for a house costing 300k in Swords someone is getting 2.5k per month.... I don't think so!

MAC
 
Re: 8% in Swords?

some people might be using their mortgage balance / original price paid to calculate the figure instead of current market value.
current market value only matters if you are buying or selling
 
gross rental yields

You should use the current market value to estimate the return or yield on your asset.

This allows you to compare the return to deposit a/c, etc.

House in Sligo = 250k

Rent = 800pm, or 9.6k pa.

That's less than 4%, before maintenance or tax.
 
5.1%

I get 5.1% with my savings account, and no maintenance expenses to pay.
 
yields

Im sure you get that return Martz.

However...........

I get a similar or slightly higher return on my rental property worth €150,000. I saw property as my only option for investment purposes because I only had the deposit in savings. the rest of money was raised via mortgage.

Even now in the era of low returns, I think there are few better options to property (obviously I'm talkin of property that has got potential and outside the large cities where yields are lower). I have 25 year mortgage, rent more than covers repayments and i appear to have a reliable tennent who intents to stay long term.

Would be glad to hear of better suggestions for accumulating wealth when one has little savings............
 
.

Don't think it's as straightforward as the calc suggest .. what about tax matters ? So for instance in the following you'd have Person A with two houses each worth 200000 and being rented for 1000 p.m. -> yield suggests 6% but the real yield is less because tax is due.. What about a section 23 owner , same situation but one of the houses is s23 so no tax to be paid.. Also - the timing of the payments will impact yield I believe and the regularity.. e.g. 12000 paid once at the start of the year should be worth more than 1000 paid p.m.... I need to go back to the maths books for this one ..
 
tv prog

The way they were calculating was to knock the last 2 zeroes from the purchase price to get monthly rental
35000 350/month
100000 1000/month

kind of leaves us a bit out then, a 300,000 propoerty should produce a monthly rental of 3000
 
Yields

That perfectly demonstrates how ludicrously overpriced property here is.

Once property values have fallen back to sensible levels it will bring yields back into line.
 
Re: Yields - answer to Tom

Hi Tom,

What is a 2-bed city centre appartment worth?. I'm not sure but I reckoned a little over €300k - based on a monthly rent of €1200 and full occupancy this gives a gross yield of 4.7%. Obviously, costs reduce that yield, in particluar the annual maintenance charge of around €1,600!.

Cheers.
 
5.1 on a savings account??

Hi Martz, where do you get this?

regards
Sikhim
 
WHAT YIELD ARE YOU GETTING

Is yield overstated?

I bought a site with OPP for 40k 3 years ago. Got FPP last year. It now worth 110k. Yield is nil.

40K loan on site is at 2.95% rate.

Its likely to rise to 150k by 2007. Is this a bad investment because the yield is NIL. Wouldnt have thought so.
 
5.1 on a savings account??

Hi Sikhim - I get 5.1% here

[broken link removed]
 
I should have known ...

thanks for reply Marz (and apologies for mis-spelling your user name!)

but should have realised you were talking about the UK and only available to UK resident, plus currency exposure for investors from a euro zone

I was recently quoted 1.20% by Bank of Ireland for a savings account

regards
Sikhim
 
yields

annual rent / current value ?

To collect the actual Yield - is tax taken into account when calculating the Yield ? I guess the property management fee is also deducted from the annual income.....
 
%

Hi Sikhim -

I'm in Northern Ireland, so that's why I can have an account with them.
 
Van Nistilrooy

On that property with OPP you have made a very good investment.

There are 2 ways to gain from property
Capital Appreciation
Rental Yield

Most times you will settle for one or the other, you have got max appreciation with no yield.

Most people rely on a yield for repayment of mortgage.

If I had a lump sum I would do what you had done.

Was the OPP difficult to get?
 
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