Cash Cows

Discussion in 'What to buy' started by --Michael--, 28th Nov, 2019.

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  1. DoggaPP

    DoggaPP Well-Known Member

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    My late father-in-law and his wife bought a huge old Queenslander in the 1950's (originally a wreck of a place I am led to believe ) in Margate (I think). He worked as a mechanical engineer during the day and they both ran the old place as a boarding house for 20 employed gents. I'm not sure of the details but it involved divided bedrooms and closing in the ground floor too (they lived in the smallest bedroom downstairs). They provided a cooked breakfast, packed sandwiches for lunch and a 2 course cooked dinner at night. They washed the linen once a week in a twin tub and brought their musical mates around once a month on a Saturday night for an impromptu band and sing-along for entertainment.

    They paid that old place off in 5 years and also renovated it room by room. They often stated how exhausting it was but that it was that single venture that turned their fortunes around for the rest of their life.

    I'm guessing the zillions of rules/expectations around boarding houses these days might be tough to negotiate.
     
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  2. Luke T

    Luke T Well-Known Member

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    LoL heaps of different views here -love it!!
    I reckon Cash Cows to me- they are high cashflow and low risk .You don't want one without the other . For me that is low purchase price(in comparison to others in the area) as well as good returns .So if you have the option of buying something that is 5-600K in an area where the median is a lot lower- that is not a low risk cash cow in my opinion even if it looks like you can get good "cashflow"because the fundamentals have not been taken into consideration
     
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  3. Mel Morgan

    Mel Morgan Sydney Property Manager Business Member

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    I hate the term 'cash-cows', used by spruikers referring to unicorns.

    Properties that offer great yields on the other had can be created using multiple strategies mentioned in this thread.
     
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  4. See Change

    See Change Well-Known Member

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    Luke

    good luck if you can find high returns and genuine low risk .

    Everything I’ve seen which has genuine high returns , has some factor to account for that return .

    The main factors I’ve seen are poor location , not standard resi , difficult to finance ( to small or multiple units ).

    The best returns I’ve seen are those available to sophisticated investors and those come with a whole different set of conditions revolving around greater difficulty in accessing your money and less ( minimal if any ) control over the management , but those often give returns of 15-20 % or more .

    Cliff
     
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  5. Sackie

    Sackie Well-Known Member

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    I can tell you quite unequivocally, this rarely if ever exists. It simply cant. If it did, the smart money would find it like a shot and the equation would change fast.

    Risk is subjective too. But if its genuinely really high returns for low risk (by most people's standards), it doesn't exist. Individuals may feel the risk is 'low' for them, but that's usually due to a whole host of other reasons, none of which have to do with the asset its self being low risk.
     
    Last edited: 30th Dec, 2019
  6. See Change

    See Change Well-Known Member

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    BTW

    we are looking at a high return investment , but I can assure you that very few people would consider it low risk ( I know I don’t ....) but for us , the potential reward is worth it and if it doesn’t work out we can manage with down side .

    cliff
     
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  7. Sackie

    Sackie Well-Known Member

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    A really sophisticated investor once told me we ( the investors) are the greatest risk variable in any investment.
     
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  8. Player

    Player Well-Known Member

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    @euro73 is NRAS program/incentives on the way to expiring soon? Any chance in your opinion that current/future governments re-introduce to encourage more affordable rental housing?

    Do you develop NDIS style dwellings yourself?
     
  9. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    The final round 4 allocations of NRAS will expire June 30th 2026. Earlier round allocations will expire before then

    It is assumed the govt of the day will come up with another scheme and I would assume it would need to be by 2024 to counter for the expiring NRAS but that is pure common sense and we all know government policy and common sense don't always go hand in hand.
     
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  10. Coastal

    Coastal Well-Known Member

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    I did this positive cashflow thing.

    Made no money and sold up. Expenses wiped out the benefit. Invested mainly in regional areas.

    Bought a few in Brisi and will continue to buy every year til I hit my target. Basically set and forget investment.
     
  11. See Change

    See Change Well-Known Member

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    alot of what the marketers refer to as " cash flow positive " , rarely are actually cash flow positive .

    I've made a lot of money buying those types of properties , BUT , only buying them when they go up in value and give me capital growth .

    For me , the Cash cows need to give returns of above 15 % to give a return that is going to make a difference .

    Cliff.
     
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  12. Coastal

    Coastal Well-Known Member

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    For my brisbane properties I am basically positively geared after depreciation.

    Im just going to sit back and let time do its thing. Job and side business will give me nice income.
     
  13. Sackie

    Sackie Well-Known Member

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    An honest post on cash cows.
     
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  14. Luke T

    Luke T Well-Known Member

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    Probably poorly worded by me but I was referring to making sure people don’t buy things quoted as cash cows that might have good cashflow but are over priced for the median of the area .
    I personally focus mostly on cashflow + properties which are low risk to me as they cover themselves . Eg: commercial property purchased singularly and split into multiple tenancies , with resi -most stuff within 30 kms of cbd that cover themselves , and some regional . But yes Yr right in saying risk is different for everybody
     
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  15. PandS

    PandS Well-Known Member

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    Goodman is a good properties cash cow for the last 10 years :D Rental increase every year without failed plus 7x times return on the money
     
  16. Beano

    Beano Well-Known Member

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    What do you mean by "cash cows that might have good cashflow but are over priced for the median of the area " ?
    I am not certain why buying over or under the median as a investment means anything important.
     
  17. Beano

    Beano Well-Known Member

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    If you live till 100 you will have 100 properties ? :)
     
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  18. Omnidragon

    Omnidragon Well-Known Member

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    Airbnb downtown Tokyo
    20% yield
     
  19. MWI

    MWI Well-Known Member

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    I thought 'cash cows' could be your IPs that generate yield to live off, hence unencumbered (so no loans).
    ...hence could be worded cash cows, cash engines, apple trees, golden geese, whatever...?
     
  20. MTR

    MTR Well-Known Member

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    This is been pretty awsome cashflow

    Currentingly renting at $1500 USD per month
    Purchase price $35,000+ $10,000 rehab
    Its around 30% gross, this does not take into account USD/currency play which massively increases yield



    6120 Course Side Way, Lithonia, GA 30058 | Zillow
     
    Last edited: 14th Jan, 2020
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