Wd40 wrote:Good point, however, with mortgage rates at 1.5% and rental yields at 4% there isn't much opportunity cost. When leverage is 4-5 times your downpayment.
Compared to say a current gross yield on Glaxo of 10.00%*? That being before you might crank it up via margin leverage.
I don't know if your yield is gross or net, but even if it's a fully-factored net, i.e. net 2.5%, on a market as volatile as property
, I wouldn't touch it. If that yield figure is gross, then gawd 'elp-yer!
A property investment has to clearly stand and make it's own case from day one, and be bullet-proof (within all reason) for the future. e.g. What happens when rates rise to 3%? And/or when you get a 6 month void and a tenant trashing a place, and so on. You need to be sure you can stay afloat through thick and thick, particularly in the earliest years of such a venture.
* Includes their 'Specials' scheduled for this year resulting from the Novartis deal.