The higher the rental yield, the higher the risk: Secret Agent
Renting in Inner Melbourne has a greater risk of increased premium, according to Secret Agent’s latest bulletin.
“An investor should be looking to try and maximise yield when finding a rental property.
“However, they also need to be mindful of the relationship between yield and risk.
“Often a higher yield can mean more risk, such as oversupply," the report noted.
“The higher yield of inner Melbourne (5.3 percent) reflects the greater risk premium.
“East Melbourne which offers a tight yield of 3.47 percent is the ultimate blue chip location, however the yield isn’t too attractive.
“Be careful of looking solely at yield to making investment decisions.
“It’s possible to obtain yields above 10 percent in remote regional locations, but once a tenant has vacated, it may be a long time before another tenant is discovered,” the bulletin stated.
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