Rental Yield Doesnt Actually Matter When Looking For Positive Cash Flow Property
b'ARVE Error: Mode: lazyload not available (ARVE Pro not active?), switching to normal mode\\n\\n\\n\\n\\n\\n\\n\\n\\n{"@context":"http:\\\\/\\\\/schema.org\\\\/","@id":"https:\\\\/\\\\/onproperty.com.au\\\\/rental-yield-doesnt-actually-matter-when-looking-for-positive-cash-flow-property\\\\/#arve-youtube-suzn67xqaui659a0b2dc7d20275120863","type":"VideoObject","embedURL":"https:\\\\/\\\\/www.youtube-nocookie.com\\\\/embed\\\\/SuZn67xQAuI?feature=oembed&iv_load_policy=3&modestbranding=1&rel=0&autohide=1&playsinline=0&autoplay=0"}\\n\\n\\n\\n\\n\\nWhen it comes to finding positive cash flow property, rental yield doesn\'t actually matter and isn\'t a true indicator of cash flow.\\nTranscription:\\nWhen trying to find a positive cashflow property, a lot of people look at rental yield as the beal and endo for whether or not a property is going to be positive cashflow. If it\'s got a certain rental yield, they say yes, it will be. If it\'s below a certain rental yield, they say no. A white be. In this episode I\'m going to talk about why rental yield doesn\'t actually matter when it comes to finding positive cash flow properties, and in fact it does matter a little bit. It can be a good tool to quickly knock out properties that just will never meet the criteria or even come close, but as we\'ll look through a bunch of examples today, you\'ll start to see that properties, even with the same rental yield, one can be positive cashflow and one can\'t be, and properties with Laura rental yields can be positive cashflow.\\n\\nWhereas properties with higher rental yield may not be so. Rental yield can be a good guideline, but it\'s not the be all and end all. So that\'s what we\'re going to be looking at in today\'s episode. Now I first came across the idea of rental yields and how important they are for finding positive cashflow property. When I read Steve McKnight\'s book zero to 130 properties in three point five years now, while that strategy probably won\'t work anymore, buying 130 properties in three and a half years on a single income. That is still a really great book and there\'s a lot of good concepts in there. So if you want to check out that book, go to [inaudible] Dot com.au forward slash 1:30. So a lot of good stuff in there about saving a lot of good stuff in there about the basic fundamentals of cashflow and stuff like that.\\n\\nSo Steve McKnight has this thing in this book called the 11 second rule. So he coined it as 11 second role. I don\'t know why it takes 11 seconds instead of 10, but so be it. But basically the idea of the 11 second rule is that you take the purchase price of a property. So for example, if we have a property at 300,000, you then divide it by a thousand or you chop off three zeroes, so that becomes $300 and you then double that number. So that\'s 300 become $600 and that\'s the weekly rent that you\'re looking for. So a $300,000 property, you\'re looking for a rent of $600 per week. Or if you have a property that\'s rented for $150 per week, how much do you want to pay for it? We do the same process in reverse you times that figure or you divide that figure by two times by a thousand and so you get $75,000 and basically this gives you a 10 point four percent rental yield, which kind of it, it\'s not the gold standard of rental yields in positive cashflow property.\\n\\nBut when this book was written, it kind of alluded to being that. And now when this book was written, interest rates were higher. I think there are around seven or eight percent or something like that. Interest rates at the moment are quite low, four to five percent sort of thing, so you do need to take all of these factors into account, but anyway, this was my first experience to rental yield and how important it was and it\'s a, it\'s a good idea, but it just doesn\'t play out perfectly as we to look at positive cash flow properties. So let\'s use a few examples of properties and we\'ll see how rental yield affects the cashflow. So let\'s start with this one. I\'ve got 36 Gros ventre street in Narrandera New South Wales.'