hi guys
May i know how do u guys calculate the yield?
I bought the Richmastery property analysis program, and no matter what I use as a deposit figure, the Yield is always the same?
Also what does a internal rate of return tell us? (IRR)
THanks.
anyone out there would like to recommend a great software thats easy to use and very good?
***********************
G’day fullout…
The yields the same because it is calculated on the Purchase price of the property. So won’t matter what you do, the yield will be what it is.
To me the IRR would be my return on my own cash in the deal…cash on cash return I think Steve calls it… the best indicator… after the true yield that you keep getting.
Hope that helps
Bill
Bill O’Mara
Real Estate,Mortgages,Share Market Strategies.
[email protected]Some people use their loan to calculate yield.
This is cheating in my eyes[
]The worth of the deal shouldn’t change according to how much cash goes in!
In this case any deal can become cash flow positive if enough deposit goes in!!
Yield is simply weekly rent times 52 divided by purchase price times 100.
ie rent x 52 / price x 100
or 220 x 52 / 180 000 x 100 = 6.355% yield.
Hope this helps.
Simon Macks
Mortgage Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
fullout
Drop me a line and I’ll send you a very simple cash on cash calculator which I made…
based on calculations outlined from Steves book.Regards
Kelvin
[email protected]hi simon
to a certain degree you are right but the Yeild is a terrible indicator of a good deal. the yeild does not take into consideration such things as rates / body corporates etc. so sometimes a 7% yeild can be a better deal than a 10% yeild. the best way to see if the deal is good is to look at every single expense and do the sums properly, yeilds are only a quick guide in my opinion.
westan[]G’day Westan…
I always calculate net yield…. thanks, as I shouldn’t assume everyone else does too.
Cheers
Bill
Bill O’Mara
Real Estate,Mortgages,Share Market Strategies.
[email protected]Hi there,
Kelvin, I’m interested in this COC calculator too! [
]
I tend to agree with Westan, it’s not a good indicator if you don’t take into consideration all the rates etc.
Doesn’t anyone pay interest if they borrow to fund their deposits? So despite cash in deal, that is also an additional expense (although tax deductable)which you’d need to take into consideration…Cheers
Sooshie []When a problem is created the solution is created simultaneously
Westan,
I never suggested that yield was an absolute indication of a good deal or even a useful way to compare deals. I personally use it as a quick check on whether I look further.
I just suggested a way to keep it all a bit more straightforward esp without introducing another variable such as deposit size.
I personally run the numbers though a spreadsheet which takes nearly all income and outgoings into account to give a result – a bit cumbersome to cayy in my pocket though!
Simon Macks
Mortgage Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Doesn’t anyone pay interest if they borrow to fund their deposits?
Sooshie, My only point was referring to cashed up investors who put in a 20%, 30% or 50% deposit etc. If they calc yield based on loan size then they have three different returns for what is essentially the same deal!
Cheers,
Simon Macks
Mortgage Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
yes sooshi
you have to include all your costs as expenses. but this shows where the cash on cash indicator can be a poor indicator. because if you get to the point where you only have $100 of your own cash in on a deal you can end up with a property showing 1000% return on cash which is just stupid.
westanAgreed Westan.
Simon Macks
Mortgage Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
sorry Simon i was writing while you were posting so i didn’t see your previous post.
i agree with your point that you can put heaps of your own cash in to make a neg. geared property turn cash positive (good point)[
]i was writing those comments about Yeild to help others who aren’t as familiar as you are[
]
bye westanHi ALL,
In any form of investing the numbers are always important. Especially the ins and outs.
Numbers are not my forte. Sometimes it appears that people are getting hooked up on always looking for the best yield, the best COCR, and the best tax deductions. There’s always someone who can suggest a better way to do something. How about using the good deal bad deal factor and relaxing a bit. It may not get you to your ultimate goal as quick but you will still get there.C2
“Is it true the more you owe the more you grow until the bank steps in?”Hi Fullout,
If you want a full indicator of cash flows you might like to take a look at my spreadsheet, you can download it from
http://www.rentmaster.co.nz/propertyinvesting/propretuen.xls
thanks
fudge111
hi all
C2
you said
“How about using the good deal bad deal factor and relaxing a bit. It may not get you to your ultimate goal as quick but you will still get there.”not sure what you mean here are you saying that we should settle for Bad deals as they will still help us to “financial freedom”?
westanHi Westan,
What I meant is that if the deal adds up good then go for it and if it’s bad then forget it. You don’t always have to search for the absolute best deal to get to finacial freedom.
C2
“Is it true the more you owe the more you grow until the bank steps in?”thanks C2
i agree totally.
i would like to add that while i got for high returning properties this is just one factor in the whole decision to buy.
westan
hi guysMay i know how do u guys calculate the yield?
I bought the Richmastery property analysis program, and no matter what I use as a deposit figure, the Yield is always the same?
Also what does a internal rate of return tell us? (IRR)
THanks.
anyone out there would like to recommend a great software thats easy to use and very good?
***********************
Hi,
If you need some help with the Richmastery software please phone 1800-427-424.Best regards,
ESC Customer Service
http://www.richmastery.com
The IRR measures the rate of the return for the cash flows that are in place.
I think Excel has an automated IRR function that may help. Just follow the wizard.
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