Return to Yield

Happening right now: "Frydenberg: Anyone seeking/eligible for maximum jobseeker allowance gets $1100 a fortnight"

Rental properties manageable on these payments might become the new "blue chip", at least for the time being.

 

Guest - yes that may be the case, can make points both sides. I'm not too sure whether it fundamentally changes decision making skewed to yield overall though, its a little tricky to unpack how the behavioural response will play out.

Also agree with you, breaking up the debt into smaller portions and diversifying tenancy risk is a great risk management strategy I think.

 

@datto where are you thinking the yields will come from primarily?

Agreed. I have been asked for house +gf pairs, duplex pairs and blocks of units more than ever lately. Also seen people just buying cheaper and buying 2 or 3 in different locations with their budget instead of 1 more premium property.

There is, of course, a tipping point where you are wasting time and money on lousy quality assets that will never grow but for those who only ever considered the big cities, there is a paradigm shift available. Many investors could (along with the required research and due diligence) go into more affordable areas and get relatively low-risk higher yield assets. This should help improve cash flow and manage risk (especially cash flow risk which is the big one this year in my opinion).

I wrote in my most recent blog post chasing locations with stable employment tenancy base is a valid strategy in the current climate. The flip side is to be cautious about markets highly exposed to industries that will suffer most this year - international tourism being one of them.

 

easy to find ... just come see me

 

You never know... but my clients want theirs near the beach if they can. Also I have my own sources lol. Stay safe Ultan.

 

When I wrote that post yesterday I was thinking shares. But in 24 hours I have changed my mind.

I was thinking dividends from all those cheap ASX companies. But not anymore. Things look really bad. Look at all the money the govt is dishing out. Oil at under 20 bucks a barrel (West Texan). Wow.

Businesses are going to be be shut everywhere I think. And it could last months!

I'm sticking with cash atm and wait and see how much collateral damage the is. I can't believe that tenants may stop paying rent and they got the blessing of the govt.

If this situation doesn't get better soon I reckon there literally could be blood on the street.

 

I’ll put sand in their yards

 

My folks have a good portion of their income from their fully franked stock dividends, I asked them a few days ago how they were travelling and they said "we will ride it out, no point selling now, as long as the businesses can make a profit in the future and come back then we only bought for the dividends anyway, short term yes it is a shame they may not pay a dividend" so they were fairly circumspect about things (but they do have enough other money that they can live without those dividends indefinitely.) Some will be much more concerned I guess and sell at a loss.

They have tenanted property also, much less worried about that given the vacancy rate in the area is around 1%.

Tricky times. I still don't know where else safer yields can be found but affordable residential property in low vacancy areas.