Hi, I’ve been reading a few books on property investments and each author has their own opinion as to what represents strong capital growth and high rental yields. I've read that the average capital growth in the Sydney market ranges between 7% to 8% p.a. Can anyone tell me in your opinion, what figure represents a: 1) strong capital growth, would it be 8, 10 or 12% p.a? 2) high rental yield, would it be 4, 5 or 6% p.a.? Cheers
Hope they're all very recent books This depends on the current economic environment, what stage of the property cycle, what city and what time frame you are talking about. Got a specific scenario?
Sounds like Jan Sommers last updated in 2001. Love the modeling based on 14-15% gross total return forever.
I work off the basis that a property should return at least 10% p.a in total. This manes that 7% CG would lead to 3% yield (and vice versa). If you talk about strong gains it would be 8%+ but obviously the higher the better. High rental yield to me would be 6% plus as you can find areas of Brisbane nudging 5% but you can easily find properties yielding 10% but have little or no chance of CG. If you were getting 10% CG and 5% rental yield that is an amazing performing asset if it can do it year on year as it is returning you 15% per year where typically a property should return about 10%.
the high rental yields yes, if you know of a 10% CG and 5% rental yield PM and don't let anyone else knows.
