I am have trouble understand the last part of Session four (Part one) in the Mastercalss pack
He talk’s about making money on a lower market rentle yeild.
Someone explain this to me please. I dont get it
I don’t know what that means. My guess however is that if you bought on a 10% yield and then yields change so that you can sell at the same rent on a 5% yield, the value of the property has doubled
crj has the right idea.
If you bought an IP for $200k and rent was $300 pw, the yield would be 7.8%. If you did well and bought under market value, you might be achieveing that 7.8% in a location where perhaps 6.5% was the standard return, as an example.
If over time, and for whatever reason, the accepted rental yield in that area dropped to 5% return, and you were still obtaining rent of $300 pw, the market value of your IP would now be around $312k.
Regards
Wake
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