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simonjb

2,760 Posts.

16/06/15

17:06

Post #: 15477036
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Originally posted by kingpins ↑

Rent return on investment housing has been pathetic for at least 30 years and there is one simple reason.

The price of houses is far too high

Rental figures are basically pegged, the people who need to rent only have a finite amount of money so regardless of how high the rent should be the market demands that they not increase beyond the ability of tenants to pay

So the simple reason for this is what everyone already knows and that is Australian housing is far too expensive by any standard that you care to list.

Commercial rental has hit the same wall and as soon as the economy tightens up some more there will be empty commercial properties everywhere

Investors need three things for a good IP , cap gain, neg gearing and rental return.

These three factors work in concert, but if one of them goes too high the other/s have to drop to keep the balance and because there has been excessive cap gain the result has to be lower rent, you can't have it both ways.
Hopefully the cap gain has been enough to cover the poor rent.
The only problem with cap gain is you don't see it until you sell

Of course there is the other way of looking at an investment, instead of looking at today's valuation, look at your original investment and base you investment calculations on those figures and you get a better result because although you may have paid $150k and it's now worth $750k you must remember your investment is only worth $750k if you sell it, and then it is no longer an investment

If you had put that money into the bank you would not expect any cap gain

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Yeah I agree I feel sorry for property investors. I blame the government. I think the tax system should be overhauled, renters have been taking advantage of the system far too long. Poor old property investors.
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Poor rental return, page-4

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