Investor form guide wrap: No takers yet for yields of up to 6% in Balgowlah

With tenants paying the "fantastic rent" of $550 per week, this two-bedroom apartment in the Sydney northern beaches suburb of Balgowlah could be a good prospect for investors, but it was passed in at its weekend auction. Ray White agent Mark Griffiths says although the tenants of two years are on an expired lease, their rent was reviewed recently and ithe tenants are paying considerably above average rent for the block. The median asking rent for Balgowlah units is $500 per week, according RP Data.

Griffiths is marketing the property with price hopes of $479,000 plus after it was passed in on a vendor bid of $460,000 at its weekend auction. Griffiths says he is negotiating with a potential buyer who put in a pre-auction bid of $460,000 as well as another buyer. If it sells for $479,000, that would secure an investor a gross rental yield of 6%, far higher than the indicative gross rental yield of 4.2% for Balgowlah units, according to RP Data. The gross rental yield does not consider the costs of maintaining the property, including council rates and other fees such as water bills and managing agent fees.

Washington Brown estimates the first-year tax depreciation deduction to be $8,000 and over five years to be $28,000.

The median unit price for Balgowlah fell by 12.5% in the past year, according to RP Data.

For more about prices and yields in Balgowlah, see the RP Data suburb page.