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  • Avatar of FireCaesarFireCaesar
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    I’m not sure how one goes about obtaining the rental yield (%) when given the value of the property with the rent per week.

    Perhaps someone can enlighten me on this. Thanks.

    Avatar of oziozi
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    Hi FireCaesar,

    Rental yield = (weekly rent * 52) / purchase prize x 100

    Eg: Rent = $100 p/w
    Purchase price = $50,000

    Yield = (100 x 52) / 50000 x 100 = 10.4%

    Regards,
    Ozi

    Avatar of crjcrj
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    Gross rental yield is annual rent/(price plus closing costs) converted to a percentage. I prefer to include closing costs as they are part of the purchase price

    This is different from calculating the percentage for cash on cash return which looks at the cash you receive after payments out divided by the cash you have put into the deal

    Avatar of AdministratorAdministrator
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    Originally posted by FireCaesar:
    I’m not sure how one goes about obtaining the rental yield (%) when given the value of the property with the rent per week. Perhaps someone can enlighten me on this. Thanks.

    G’day again Nero [biggrin]

    Monopoly answered me back in May this year on precisely this question. Hope she doesn’t mind if I quote her:
    “There are so many ways of doing it (my way; which is probably the longer way) of doing it is as so:
    Weekly rent (170 x 52 = 8,840 annual rent) divided by cost base for property (100,000) multiplied by 100 = 8.84%

    Using Karl and Rita’s figures:
    170 * 52 / 100,000 * 100
    8,840 / 100,000 = 0.0884 X 100 = 8.84

    Another example:
    220 p/w X 52 = 11,440 (annual rent) divided by cost price of say 150,000 – hence
    11,440 / 150,000 = 0.0762 X 100 = 7.62%
    Have fun!!!!”

    Perhaps search my posts around May 2004, as there were quite a good number of replies on that thread.

    Cheers
    Greg

    Avatar of FireCaesarFireCaesar
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    crj, thanks for your contribution.

    Greg, those examples really did help. I know how to calculate now.

    *Nero huh? Hehe … ;) (That was pretty funny I thought)

    So what do you consider a good rental yield (as a %)? with closing cost and without …

    Avatar of AdministratorAdministrator
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    Originally posted by FireCaesar:
    crj, thanks for your contribution.
    Greg, those examples really did help. I know how to calculate now.
    *Nero huh? Hehe … ;) (That was pretty funny I thought) So what do you consider a good rental yield (as a %)? with closing cost and without …

    Hi again Nero, [bonjour]

    Are you still fiddling while Oz’s bushfires rage, FireCaesar? [biggrin]

    Re the type of rental yield to aim for, I’m more into balancing my -ve CF (+CG) properties with my +CF (and, happily, +CG) properties), and still be about $20,000pa +CF in front over my entire portfolio.

    It’s harder to get properties at greater than 10.4% yield these days (ie., Steve’s 11 second formula). This fact has happily forced me into “looking sidewards” for a different angle (Steve’s byline: “Success comes from doing things differently” has helped me immensely with my new outlook). So I find myself chanting “buy wholesale, sell retail” as my mantra in today’s market, rather than being solely focused on Rental Yield, as I have in the past.

    Whatever works for you, Nero, do that. And meditate really deeply about Steve’s byline, especially on how you might be able to apply it to your unique circumstances.

    Cheers and Good Fortune
    Greg

    Avatar of FireCaesarFireCaesar
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    Hey Greggy,

    I was really chuckling to myself with your cute little chant “buy wholesale, sell retail”. Really cute.. Did you think of that yourself?

    Btw, where can one look for wholesale IPs?

    Avatar of AdministratorAdministrator
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    Originally posted by FireCaesar:

    Hey Greggy, I was really chuckling to myself with your cute little chant “buy wholesale, sell retail”. Really cute.. Did you think of that yourself? Btw, where can one look for wholesale IPs?

    Hi again
    Wholesale Ip’s? You do them yourself. It’s called “doing land sub-divisions” and/or house and land packages, chief. [cigar][buz2][biggrin]

    Cheers
    Greg

    Avatar of FireCaesarFireCaesar
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    Oh, so that’s what wholesale is all about. I feel pretty silly now yet I’m glad I learnt something.

    In that case, do people buy plots of land and build houses in them for sale?

    Avatar of AdministratorAdministrator
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    Originally posted by FireCaesar:
    Oh, so that’s what wholesale is all about. I feel pretty silly now yet I’m glad I learnt something. In that case, do people buy plots of land and build houses in them for sale?

    Hi Fire

    Life’s too short to feel silly, right? The main thing for ALL of us is to:
    1. Keep learning and (more importantly…)
    2. ACT on these new learnings

    Q: Do people buy plots of land and build houses on them for sale?
    A: If you buy a block which someone else has sub-divided, you’re paying retail, because he’s built his profit into the price you paid. But if you subdivide the land yourself, and either build on it or sell it for a (much higher) market price, you’ve paid wholesale and sold it at retail.

    If you’re new at this game, here’s a simple way you may be able to start. I live in the Sunshine Coast Hinterland in a small country town (Pop 20,000). 6 months ago, a beautiful old Q’lander house on a 1/2 acre block in the street next to our PPOR sold for $160,000. I was away on holidays, so didn’t know it was coming onto the market, and missed out on the deal. The figures would have worked something like this:
    ~ I buy house on 1/2 acre for $160,000 (not any more in my town at anywhere near that price!!)
    ~ I pay council “Headworks” charges etc, and cut off 1/4 acre at the back of the block
    ~ I sell the house on 1/4 acre for very close to $160,000 (that’s right!!) and get a virtually free block of land worth $80,000 – $90,000.

    What you do with the land, is up to you. I probably wouldn’t have sold the house, just get it revalued to help finance building 2 x 2BR duplex units (brick).

    After you’ve done a number of these deals, move on to bigger subdivisions. Budget to spend a modest amount attending a couple of well-regarded development seminars, such as Peter Comben’s:

    http://www.smartpropertydevelopment.com.au

    Also check out these sites:
    http://www.chrisbatten.com.au
    http://www.yourproject.com.au

    There are many others, but that should get you started. Remember, it’s all about acting on advice offered by experienced operators. [cap][cigar][buz2]

    Cheers
    Greg

    Avatar of MonopolyMonopoly
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    Originally posted by Greg F:

    Originally posted by FireCaesar:
    I’m not sure how one goes about obtaining the rental yield (%) when given the value of the property with the rent per week. Perhaps someone can enlighten me on this. Thanks.

    Monopoly answered me back in May this year on precisely this question. Hope she doesn’t mind if I quote her

    Pssst…Greg….[winking] here’s the thing (a) it is not my exclusive formula, and (b) take the credit yourself (no one will know, and I promise to keep it [sealed]) [kiss]

    I have no objections to being quoted, as long as you spell my name right (which you have done) so go for it!!! [tongue]

    Cheers,

    Jo

    Avatar of AdministratorAdministrator
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    Originally posted by Monopoly:

    Quote:
    I have no objections to being quoted, as long as you spell my name right (which you have done) so go for it!!! [tongue]
    Cheers, Jo

    Hi Jo

    Glad you like my spelling. Two letter, monosyllabic names like “Jo” are my forte!! [biggrin][biggrin] I’m also pretty good at four syllable ones like Mo-no-po-ly, because I get to break your 4 syllables into 2 letters each. [buz2]

    Seriously though, have I ever told you Niki and I are spelling authors? (Legends in our own lunch hour!!) We wrote Rigby Heinemann’s “Strategic Spelling” Program (14 books from Grades 1 – 7). It’s still a best seller after all these years.

    But I treasure my success as a father, husband and teacher much, much more.

    Cheers
    Greg

    Avatar of MonopolyMonopoly
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    @Monopoly
    Post count: 1,612
    Seriously though, have I ever told you Niki and I are spelling authors? (Legends in our own lunch hour!!) We wrote Rigby Heinemann’s “Strategic Spelling” Program (14 books from Grades 1 – 7). It’s still a best seller after all these years.

    Yes I know the program well!!![biggrin] I am humbled by your presence!!! [thumbsupanim]

    Seriously, that is tremendous going Greg. Do keep up the good work as our kids need more people like you and Niki to fill the gaps that our education system is currently unable to fill!!![glum2]

    Cheers,

    Jo

    Avatar of AdministratorAdministrator
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    Originally posted by Monopoly:

    Quote:
    Yes I know the program well!!![biggrin] I am humbled by your presence!!! [thumbsupanim]Jo

    Hi Jo

    I’ve tried for the past 25 years to get my lovely wife Niki to be “humbled by my presence” like you are, and guess what? She just thinks I’m like most men, good for a couple of laughs!! [biggrin][cap][biggrin]

    I keep dreaming of making the bigtime in her eyes.
    [blush2]

    Cheers
    Greg

    Avatar of FireCaesarFireCaesar
    Member
    @FireCaesar
    Post count: 71

    Greg, I’ve sent you an email. Did you receive it?

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