Warren Buffett penned a recent piece where he talked about his real estate investments.
One was an investment in farmland in 1986 where the normalized return from the farmland he calculated to be 10%
The other was an investment in New York Realty where the unleveraged rental yield was around 10%
Both these investments worked out very well for him
Whats interesting to me was that both the investments gave him double digit yields when he invested.
Realty investors know how difficult this is to achieve.
In Mumbai,residential yields are now around 2% and commercial yields are around 6%.
The only other person I know who is getting double digit yields on the current value of her property is my Mother-In-Law.
Maybe,I should blog less and listen to her more !
6 replies on “What my Mother-in-Law and Warren Buffett have in common”
Are you her tenant 🙂 ?
LOL !!Nope !:)
hahah good one sirji
since the required yield on property every investor wants is 9 to 11% but we r just geting 2% on residential and 6% on commercial
does this means there is a correction expected in property market to match the yield of 10%..i dought at the current prise of property ….yield will go up .. i mean on property of 4 cr home i am geting a rent of 60000-70000 per months(yield 2.10%)…that too in lalbaug area…i dough atleast in next 10 to 15 yeasr anyone will pay 4000000 lac as a rent for a whole year…i mean atleast i am expection a correction in property till yield matches upto 7- 9%… or may be i will sell the property and keep in some other asset class
Is 10 % yield on current market value?
Yes
This is the case all across urban India…realty yields are v low as compared to prices.