Picture this. Landlord owns over 100 units. Has done so for more than 50 years.
Easily bringing in over one million 800 thousand dollars a year.
Over 50 years, how much would have been accumulated?
Notice of rent rise each year. This time $100 a week.
Anyone out there tell me how the constant rent rises can be justified?
Remember, currently bringing in $1.8 million a year.
How much is the asset worth? You can’t look at the gross return you have to look at the net return ie gross after expenses.
The landlord has to make a return on the value of the asset greater than, say, what he would get with the same amount invested in the share market other wise why bother with that investment?
The average value of a unit across Australia is $750,000, he owns 100 so the value of his asset is $75 million so for a 5% return you would want a return of about $3.5million. He is getting a poor return if $1.8million was his gross income.
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