Originally Posted by
Beagle
If you don't mind me interjecting and opining on that one, (seeing as I have done 10001 rental property returns for clients over the years)
People have been chasing safe net yields. For example ARG a PIE is still yielding approx. 5.2% net (about 7.7% gross for anyone on a 33% tax rate) even after its good run in the last couple of months up from $1.07 to $1.20 today. Weighted average lease term is over 5 years.
Auckland residential property generally speaking after all costs might get you about 3% return before tax (2% after tax for an investor on a 33% tax rate) assuming the tenant actually pays the rent, doesn't trash the house or contaminate it with methamphetamine. The only reason to have ever been a residential landlord in Auckland, (capital gains), no longer applies and I think we are likely to follow Sydney and Melbourne down. Why anyone would bother with a Government looking to make life even harder for landlords with even more enhancements to tenants rights and a possible capital gains tax / and or ring-fencing of tax losses is beyond my comprehension but I guess some people simply feel more comfortable in bricks and mortar they control themselves because its what they've always done.