Is property really a good investment?

$35k holding cost can be offset by the $35k capital growth each year, assuming 7% capital growth rate. It is equivalent to living in a house for free. If you rent the place for $500 per week, it's $25k out of pocket each year.

 

Well it appears it’s a yes.

From all the PC mortgage brokers at least ...

 

I disagree with you
EVERY IP I have brought has made a profit (based on 100pc borrowing)
I do acknowledge the CG has been poor compare to the investors who invested in Sydney and Melbourne but income wise it has been very worthwhile
Just buy a property that yields more than say 7pc net ...then buy more and more !

 

Property investment is a part time job. During the search phase you are earning negative money on your time and it seems like a lot of work to find that needle in the haystack.
Spend time working on your strategy and then you searching will be more focussed and able to find what you are looking for. Even then it will take time and patience. Finding the right deal can take months.

 

I know property is a long term game, I have invested in the sharemarket for a long time and have believed in buy and hold and have done well, 2 main reasons I am now looking at property are: leverage; able to get much higher leverage at a much lower interest rate, and also I don't see many buying opportunities in the stock market currently. I'm not looking for a quick gain, I just don't want to be losing a lot of money initially. For e.g I did the numbers on a 4brm house for 500k to live in initially (to avoid stamp duty) whilst renting out the rooms seperately - airbnb or sharehouse, and it still didn't add up I would still be losing money with close to 100% occupancy on airbnb, not sure who are the people that are willing to pay 35k/yr after tax (interest only!) to own their own home?? That's a huge chunk of after tax income and thats on a 500k place which is very cheap compared to cities

 

I can’t imagine how Sydney could possibly experience another boom without going through a huge downturn. Ppl are already paying 1 mil for a house in Blacktown by 2030 that’ll cost 2 million? It sounds ridiculous.

But people with 200k sitting in their bank would only be getting $50 a week return on it. You can feel the forces of the central bank pushing you into real estate.

 

I've been checking inner brisbane and most are returning around 3.5% or less. You will be really lucky if you can find any above 4% these days.

 

The 35k would be based on owner occupier, i assume. Figure in rent saved and no tax on sale, IF it goes up, and itll be less than 35k. Probably more like 10-15k? Dont understate the idea of owning you own home for most people.

But for sydney right now rent is much cheaper than buying.

10 years ago sydney was neutral cashflow. He market looked bad. Would you have bought? Did you buy shares in 08?

Typical newbie burnout.

 

Bingo. And that is why there will be no boom there for a long time. For it to boom those places would then have sub 2% yields. Won't happen.

 

I don't know where you are looking to find a 4br house in Sydney for $500k.....the only place I can think of where you'd find those kind of prices is in the Housing Commission suburbs of Mt Druitt. The repayments are $25k IO on the total $500k, so your calculation is wrong there.

Are you looking at something to live in, or pure investment?

 

If there is a boom, rent will go up to reflect it. and the yield will stay at around 3~3.5%. that's what happened in sydney as well.

In the area I used to live in sydney, $650~700/wk was about the average 10 years ago for a house valued around $900k. Now the price has gone up to $1.5m and rents around $1k mark.

 

Sydney was not cash Flow Neutral in 2008 09....

I was paying 8.5% interest on my loan than.

Sorry their are exceptions. **** house in the western suburbs.
Yes Rent was $300 buy price was 300k or so.

Good suburbs say apartments in Randwick Kensington Inner City were $550,000 than.

That means interest only repayments and rates were around $45- $50,000.

The rent equivalent was $450per week. Just $20,000 per annum. Renting was a **** load cheaper.

I bought two places than while renting so memory is great.

Short term memory.

Yes western Sydney did well. BUT GOOD AREAS WERE ALAWAYS HARD TO HOLD.

 

Blacktown suburb average is about $740,000. Dont let that get in the way of a good story. 10/15 years from now $1,480,000 who kniws.
Put some skin in the game.
Speculation from side lines does not mean much.

You seem to suffering analysis paralysis.

 

You've got better rental yields than my part of Sydney.... a standard $1.5 mill house only rents for maybe $700. 10 years ago, same house you'd be looking at 750k to buy and maybe $520 rent.
Prices boomed, but rents definitely not keeping up.

 

The answer is NO

 

checked again. the price has gone upto $1.8m not $1.5m. and the rent is still around 1k. What did i do. I should have kept the house.
anyway. the yield has gone down from 3.5% to 2.9% not keeping up but still going up to reflect the new price.

 

No way rents will go up with prices anything significant. The last time rents went up substantially in Sydney is when rates were high (8-9%) and investors were abandoning the market. That was 10 years ago. The yields in Sydney now are pitiful due to the price boom.

 

The median in my suburb is 1.8mill too, but I think the rentals tend not to be the median or better properties

 

My area. Data from RP data. Current yields are terrible... Note, looks like I overestimated the rent of 10 years ago. Looks to have been only around $465 per week.

 

median is 1.85m in epping?? I sold a 4 bed 3 bath house around epping 3~4 years ago for 1.5m. prob can get close to 2m now.