Buying the Right Investment
Stephen Speck and Alex Browne from Gorman Commercial sold two properties at 968 and 970 Toorak Road, Camberwell at auction last week.
Managing Director, Stephen Gorman commented, ’’ The surprising thing was that the rents were around market value level yet we still achieved yields of 2.9% and 3%, which indicate buyers are seeing value in yields in bricks and mortar around 3% as far better than bank term deposits with no opportunity for capital growth. The key thing at the moment for clients seeking sub $1 million property is to look at the land size and the future potential of any opportunity.”
Mr Gorman believes the yield is of course important, but not to expect it to be much better than bank yields because if it is there may be a reason that is not readily identifiable. He says, “Undertaking due diligence on the tenant and the rent levels in comparison to the market is a great start to buying the right investment. Short term big yields normally always should be reason for concern. Like anything, if it’s too good to be true, it probably is too good to be true.”
Published in The Age by Simon Johanson on 17/05/2017