So what is considered to be a good ROI (return on investment) on houses? Please don't quote me anything to do with negative gearing. At the end of the day what sort of return is the average investor after?Scott No MatesParticipant@Scott-No-MatesPost count: 3,789
It can vary widely, how do you classify ROI – is it simply gross rent, gross rent + 'percieved' capital growth, realised capital gain, net rental return, net capital gain etc with another hundred variables thrown in eg before or after tax, trust/company/syndicate etc.
Thanks. I have researched web sites that talk about positive geared properties and they have properties listed quoting yields of between 6% and 10% returns p.a. I did my calculations and they are gross yeild on purchase price (contract price) and nothing to do with percieved capital growth and assuming before tax that I can see. There are more than one web site quoting ROI this way.
Richard TaylorParticipant@Qlds007Post count: 11,297
Most long term investors dont negative gear.
i dont own a single property that isnt considerably positively geared.
Yours in FinancetiminchinaMember@timinchinaPost count: 3
Duncan Bannatyne, a seasoned multi-millionaire investor in the United Kingdom (but with international interests) says that he looks for a minimum 20% return on investment. Returns like this can be achieved in any of the major investing classes: real estate, shares and trading businesses, but the higher the return, generally the higher the risk. Cash and bonds don’t offer great returns and are mainly useful as part of a more diverse portfolio (or as the most liquid asset for easy transfer to another investment class).
Personally, I’m looking for properties that (with some work) will give me positive cashflow returns from a minimum deposit. The almost inevitable capital gains are a bonus, but I’m not currently paying a huge amount of attention to the capital gains as I assume these will be almost universal for property (unless in a town that could disappear in the next few decades…)
My two cents…
Thanks Tim. Just a point of clarification please. Is the 20% a return on the cash one invests ie. in property the deposit that is put up or a return on the purchase price considering most people borrow? You do say an invetment that will give me positive cashflow returns from a minimum deposit. So it seems that one should be looking at a return on your money you have tied up in the deal and not the cost of the deal?
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