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Gross yield is the headline. It looks generous because it ignores everything that comes out before the money reaches you. Most investors end up comparing a gross figure from one source against a gross figure from another, without ever accounting for the costs that separate the two.
The list is familiar once you see it: property management at 8 to 10%, maintenance and repairs, vacancy periods, rates and insurance, and body corporate fees. Once those are stripped out, a 4% gross yield in a capital city often becomes 2 to2.5% net. The advertised number and the real number are rarely close.
We keep it transparent. Net yield is net rent divided by total cost. Net rent is gross rent minus all operating costs. Total cost is land, stamp duty, build, fit-out, and all Dominion fees. There are no hidden additions and nothing left out to make the figure look better than it is.
Take nine rooms at $375 per week. That is $175,500 gross rent per year. Operating costs of around $35,000 leave net rent of $140,500. Against a total investor outlay of roughly $1,653,500, that is a net yield of 8.5%. Compare it to a $1.65 million residential property returning $50,000 net, which is 3%. Same capital, roughly 2.8 times the income.
Numbers on a page are one thing. Under the terms of the Keystone program, Dominion guarantees a minimum of $140,000 net rent in year one. That is not a projection or a best case. If the return falls short, Dominion makes up the difference.
Where to from here. We are happy to send a full net yield breakdown on alive Dominion project so you can run the numbers on your own terms. Just get in touch.
The figures above are illustrative examples, not a forecast of returns on any particular investment. This is general information, not financial advice. Investors should seek their own advice and review the relevant program terms before committing.
