[Ken S]

I appreciate this has not much to do with Mac's but I guess that's the Orange Sofa for you..

Is it possible to calculate a ballpark/estimate on a property price (for an investment property) using a suburb's average rental yield and the current rent? If so, a little help would be appreciated.

Rental Yield* = 4.4%
Current Rent = 320/wk

*according to Managed Funds - Superannuation Funds - Managed Investments

I'm also looking at median house prices, postcode profiles etc for the area and may end up getting a valuation done but looking for a rule of thumb measure at this stage.

Other factor is I am in discussions with the owner directly and not through an agent.

Cheers

[ajbeardy]

Look at using a cap rate calculation:

All you need to know about cap rates - Intelligent Investor

[Steeley]

You could take the weekly rent and multiply by 52 for a yearly amount. Divide that yearly amount by the yield percentage.

$320x52=$16640
$16640/0.044=$378181

[Mac Ram]

EDIT - ^^beaten to the draw

[Ken S]

Wow - talk about rapid responses - thanks!!

BTW ... Aren't people that are old enough to be answering this question supposed to be having breakfast with the kids between 7 and 8.30 on a Saturday :-)

[tcimac]

I use a very crass method of figuring out how much rent I will get on an investment property I am looking at by dividing the purchase price by 0.1%.

As I said, it is very crass, but it will at least give you a very ballpark figure on how much you can expect to pay for a property.

The other thing to bear in mind about median price is to ensure you are looking at a yearly median not a monthly one. Monthly median house prices that some real estate agents publish can be very misleading.

[novice]

its not as accurate, but a builder friend used to always start by taking this approach:

Rent $320 a week, approx price $320,000

very very rough and only ever applied it to houses not units.....but its different!

[Steeley]

Originally Posted by Ken S

Wow - talk about rapid responses - thanks!!

BTW ... Aren't people that are old enough to be answering this question supposed to be having breakfast with the kids between 7 and 8.30 on a Saturday :-)

No wife. No kids. No girlfriend. And really not even any friends. But hey, I've got equations...*sigh*

[liquidsquid]

don't care much about the rent i get from my properties other than i don't have to work too hard. One of my places i did buy for $64K, it earns me $800 a month & now its work $250K. I must be ahead.

[woofy]

I don't think any of those formulas are going to help you. We until recently were living in a $300/wk house which was worth somewhere in the mid 500ks or more. We bought a place for $445k that was bringing in $360/wk, and was much newer and in better shape and in a slightly more expensive suburb.

That's Melb though...in the SE/East suburbs.