I was up here at a few open houses from 2 bed units to 4 bed homes of varying levels of opulence in Townsville today and noticed all real estate agents were really pushing home the concept of "great rental returns" and "great cashflow returns."
one example was $260k two bed unit, 80 square metres, no carport or garage, external laundry at the front of the unit masonry block wall with no plaster inside (common up here). Body corp $400 per qtr(inc sinking fund), rates $900 per half.
Rent = $190 - $200.
Now I'm no accountant but to my eyes that is one ordinary return. I was hearing people comment on the Real Estate agent's assumption about the great return and they were agreeing amongst themselves. Now captial growth is always an option but after the stellar performance on these properties up here in the last 3 years, one has to wonder where it peak. Last month unit sales actually dropped in Townsville.
I stood looking at this one particular place and was approached by the real estate agent and asked what I thought about this great little investment. Being out of earshot of all others there I suggested it was not a great investment at all. It was a terrible investment based on yield and was given a right dressing down by said agent!
Where is everybody else at in regard to rental returns? Doesn't the real estate agent have a duty of care to not mislead potential buyers?
In almost the 12 months I have been up here I have learnt that for me personally, Townsville is living in it's own little bubble and it would be good to see a debt ratio per household based on Townsville post codes.
Please comment at your leisure.