Its fantastic.......if you dont mind sacrificing a potentially massive fall in the value of your asset for a slight gain in monthly cash flow.looking for advice have the opportunity to add to my existing portfolio of 6 properties by purchasing in a good location with a minimum yield of 4.3%, all existing properties on interest only with total L-V on all properties of 60% advice appreciated
Are you able to get an IO mortgage of less than 4.3%? If not then a yield of 4.3% is largely irrelevant since you'll stll be making a loss on a monthly basis (not including transaction costs or maintenance charges/insurance/wear and tear/voids). Well that's what I would have thought anyway, you may have other insights.looking for advice have the opportunity to add to my existing portfolio of 6 properties by purchasing in a good location with a minimum yield of 4.3%, all existing properties on interest only with total L-V on all properties of 60% advice appreciated
On what basis would you go it?I would go for it bricksguy. You should get finance at 0.7% over ecb which may reduce over time. With market so cold at present more opportunities will become evident whilst the herd are jumping out the window. Whilst I agree with not forecasting prices on AAM at present is probably a good idea I think we should be able and ought to discuss presenting opportunities as panic sellers sell to the more professional investor.
I would have said the yield was pretty poor. 2 years ago it would have been a good yield but rates have increased by 2% since then, your expectations of what constitutes a good yield should also. That yield represents an investment that makes a loss on a day to day basis (ignoring all other costs, and admittedly all other sources of income - access rights, mineral rights, image rights .....)I just think market so slow if he gets a motivated seller under pressure he could well get it for cheaper than he thinks. The contrarian in me thinks this yield is attractive in the current climate and human beings need to rent houses.
Are you expecting an improvement in the climate of the rental market anytime soon though? Rising rents and lower interest rates are by no means guaranteed.The contrarian in me thinks this yield is attractive in the current climate and human beings need to rent houses.
The earnings yields on Irish banks average somewhere between 14% and 15% - admittedly the market is fretting about the earnings hit to the Irish financial sector should the housing market turn sour but even if average earnings were to halve, this part of the Irish equity market would still represent better value than the above mentioned investment property.
Just to correct a small matter. The "leverage" in this case is costing the OP more than the asset is earning. The sock at the bottom of my cupboard gives me a better return than that. I'm not advocating equities either, I'm just highlighting the costs versus returns.ah come on Thomas do you not realise you are not comparing like with like. The op is getting leverage on his returns using the bank's money whereas with stocks you are generally not leveraging your returns unless using derivatives.