Winning Richmond cottage in The Block 2011 grossing 9.2% rental yield, sort of

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The Richmond cottage renovated by Polly and Waz on The Block 2011 is now yielding its buyer a 9.2% gross yield, sort of, according to its leasing agent.

It was the Cameron Street cottage that sold at $855,000 under the hammer to the buyer’s agent Frank Valentic at its televised August auction.

His recent AdvantEdge newsletter suggested the agency’s property management team had achieved a “great result” for the landlord.

“We achieved a rental of $995 per week fully furnished, much higher than the estimate of $700 per week from local Richmond agents.

“With around $40,000 in the building, chattel and furniture depreciation, our client will achieve a whopping 9.2% return,” Valentic advised in an unusual method of calculating yields.

Valentic said the 9.2% was its approximate gross rental yield after taking into account the estimated depreciation.

Its $995 asking rent reflected a 6.05% typical gross yield.

Before auction listing agent Russell Cambridge estimated it would rent for between $700 and $750 per week, or a gross rental yield of 4.9%

The investor was taking an overseas holiday at the time of the auction.

“We think we’ve bought really well; the land value there alone, we would estimate to be about $650,000 to $700,000 for the single fronts, and if you were to rebuild a three-bedroom two-bathroom house from scratch, you probably couldn’t do it for $400,000, so it’s well below replacement value,” Valentic wrote.

“It makes it really attractive for our client,” he said, adding that the investor “plans to hold on to the property for five to seven years and should see good capital growth in the area over that time frame”.

The Block 2012 filming is well underway on Dorcas Street, South Melbourne.