baby boomers 2011 onwards, page-16

  1. 21,737 Posts.
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    I think when you consider boomers using rental properties for their retirement income you need to ignore the actual return rate based on the current capital value.

    For example if you bought a property at least 10 years ago for say $300k and rent was say $300 per week then you have a 5% return before costs. For this we will assume costs are about 3% as per Freewill's post - though I think this can be reduced quite a bit. So actual money recieved after costs is approx: $6000

    Now fast forward to now property worth say $600k and rent is about $600 per week, and we have an income of about $30k per annum. If we assume costs are still approx 3% = $18000. Then you will actually have $12000 in actual income after costs.

    At this point in time it is the income that is more important than the actual return rate. Plus who would actually spend anywhere near $18k in costs when the property is owned outright? Even on a $600k property I doubt I would even get close to $8000 in costs - so the reality is the income from a property bought 10 years ago for $300k would more than likely be in the order of $22000 - not bad really!
 
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