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keycocker



Joined: 10 Jul 2005
Posts: 3311

PostPosted: Sat Apr 13, 2013 3:07 pm    Post subject: Reply with quote

Unlike a bond, the price people will pay for rent yaries according to the client.
You might have a pool of hundreds of people who would rent from you at $1500/mo. But only three much less desirable potential tenants at $3000.
Would you calculate yield based on the $3000 or the $1500 when analysing a potential buy?
You won't know the precise numbers at that time because you have to run ads and interview clients to determine the quality of the rental pool.
Knowing other homes in the area are advertised at some rental price doesn't tell you how much you can get from a reliable tenant.
The price a person will pay on a resale of a private home has a very tenous connection to its rental yield.
It is tied more closely to the clients self image and desire to please the spouse, even in cases where the client plans to rent and not occupy.
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stevenbard



Joined: 11 Nov 1993
Posts: 4012

PostPosted: Sat Apr 13, 2013 3:14 pm    Post subject: Reply with quote

You would base your return on the neighborhood averages and the location and quality of your property. For instance in Malibu, properties might currently sell with a 3.5% return, whereas in Riverside a 6.5% return. This is what makes Malibu so expensive. Within Malibu there are better neighborhoods with even lower returns.

The same in Maui. Wailea cap rates are lower than Wailuku. Meaning an investor in Wailea might expect a 3.5% return, but in Wailuku expect a 6.5% return.

Is it really worth getting shot in Riverside while trying to collect the rent?
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boggsman1



Joined: 24 Jun 2002
Posts: 3500
Location: at a computer

PostPosted: Sat Apr 13, 2013 10:19 pm    Post subject: Reply with quote

mac wrote:
Rupert Murdoch?

To quote my favorite 1/2 term governor , ya think?
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keycocker



Joined: 10 Jul 2005
Posts: 3311

PostPosted: Sun Apr 14, 2013 4:32 pm    Post subject: Reply with quote

A modest three bed two bath in Wailea is likely to start around million and rent for $25K a year for a yield of 1% after taxes and insurance, small maintenance.
If you bought it three years ago it is likely to sell for a $100K profit in this market, without any change in the cap rate at all.
The homeowner client is unlikely to know what it rents for.
Interest costs come right out of that profit, which is why low interest rates are good for real estate investors in both the long and short run.
If the clients wife really loves the tree in front yard and the kids school, you might make $125K instead.
Real estate doesn't respond well to text book analysis except in very large aggregates of commercial buildings.
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mac



Joined: 07 Mar 1999
Posts: 5080

PostPosted: Sat Apr 27, 2013 11:39 am    Post subject: Reply with quote

For those of you convinced that everything will be better if we just eliminate government regulation and let the magic of the market do its thing, I wonder if you know about this:

Quote:
Everything Is Rigged: The Biggest Price-Fixing Scandal Ever
The Illuminati were amateurs. The second huge financial scandal of the year reveals the real international conspiracy: There's no price the big banks can't fix
by Matt Taibbi
APRIL 25, 2013
Conspiracy theorists of the world, believers in the hidden hands of the Rothschilds and the Masons and the Illuminati, we skeptics owe you an apology. You were right. The players may be a little different, but your basic premise is correct: The world is a rigged game. We found this out in recent months, when a series of related corruption stories spilled out of the financial sector, suggesting the world's largest banks may be fixing the prices of, well, just about everything.

You may have heard of the Libor scandal, in which at least three and perhaps as many as 16 of the name-brand too-big-to-fail banks have been manipulating global interest rates, in the process messing around with the prices of upward of $500 trillion (that's trillion, with a "t") worth of financial instruments. When that sprawling con burst into public view last year, it was easily the biggest financial scandal in history MIT professor Andrew Lo even said it "dwarfs by orders of magnitude any financial scam in the history of markets."


Now for you whackies on the right, there is substantive criticism of Obama and Holder contained in the article, and the huge problems of the too big to fail. And for Iso, and his reliance on the money making machines on right wing media, there is a little insight into how the gold market has been rigged to take his money as well.
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swchandler



Joined: 08 Nov 1993
Posts: 5745

PostPosted: Sat Apr 27, 2013 2:14 pm    Post subject: Reply with quote

mac, just curious, do you have a link to the article?
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stevenbard



Joined: 11 Nov 1993
Posts: 4012

PostPosted: Sat Apr 27, 2013 2:36 pm    Post subject: Reply with quote

Mac, you must ask yourself this question: Why isn't obama doing something about this? Is it too big for him? Rolling Eyes He, doesn't understand banking or business in my estimation. And, he's too busy making love to the Oligarchs who put him in power. Crony capitalism, bankers gone wild, Benghazi, 158 islamists arrested and more in the shadows. 5 major islamic terror attacks since he was elected. Bush had none after 911.

Look, I didn't like Bush. I don't like Obama. This system is now corrupt because there is so much govt involvement. Corporate corruption is rampant because there is so much govt involvement. There should have been consequences for bad behavior. The banks should have been allowed to fail. Corzine should have been prosecuted for "misplacing" billions of $. Sorry, but your big govt is just another opportunity to steal from Americans.
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pueno



Joined: 03 Mar 2007
Posts: 2616

PostPosted: Sat Apr 27, 2013 3:18 pm    Post subject: Reply with quote

swchandler wrote:
mac, just curious, do you have a link to the article?

SW, put "believers in the hidden hands of the Rothschilds" (with quotes) in Google.

Click a few links, and you'll end up here.

Google works well for this sort of thing. It's great for finding suspected cases of plagiarism.
.
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mac



Joined: 07 Mar 1999
Posts: 5080

PostPosted: Sat Apr 27, 2013 3:27 pm    Post subject: Reply with quote

Bard--there is corruption in business and in government--because both involve humans. The difference is that only government has a chance to rein in the worst abuses of business. Do me a favor and read "The Jungle", by Upton Sinclair--or look at the collapse of a factory in Pakistan and a hospital in India to see what happens when government abandons the regulatory role.

All of you righties that somehow get to the beach on public roads, launch from public recreational facilities, and enjoy water that is clean enough to be healthy--all thanks to government--would be just astonished with what business will do if you let them get away with it.
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slinky



Joined: 24 Aug 2007
Posts: 404
Location: Old Saybrook Ct.

PostPosted: Sat Apr 27, 2013 6:39 pm    Post subject: Reply with quote

Bard, your question is a good one, unfortunately the answer is all too obvious: Obama is in the pocket of the banks. He has given them everything they could possibly ask for.

Unfortunately the republicans reside there as well.
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