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Confirmation on expenses to work out positively geared property

Discussion in 'General Property Chat' started by jesslb, 6th Feb, 2016.

  1. jesslb

    jesslb New Member

    Joined:
    6th Feb, 2016
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    Location:
    Melbourne
    Hi everyone

    I am looking to buy a positively geared property and just want to get validation on my expenses to see if I have done my working out correct

    So I have done this on multiple price point but will show my working outs on $250K

    So I read before that a good deposit amount is 12% so $30k + 10k (Stamp duty)

    $220k Loan from the bank

    Expenses
    Loan Repayments (4.68% Interest only) $198 weekly
    Rate $1500 (approx.) $29 weekly
    Corporate fees $1200 (approx.) $23 weekly
    Mortgage insurance $3000 (approx.) $58 weekly
    Real estate fee (5%)

    Total =$324

    So does this mean for me to buy a positivity geared property at $250k (as an example) that it needs to collect more than $324 to be positively geared?
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Location:
    Sydney
    Profit = income less expenses
    $X = (324) - (198+29+23+58+16)
    x = 324-324 = 0

    So yes, more than $324

    But you have not taken into account any non-cash deductions, tax savings or interest on the deposit and stamp duty etc.
     
  3. Marg4000

    Marg4000 Well-Known Member

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    Qld
    You will also be wise to include allowances for vacancies and maintenance, also agents letting fees.
    Marg
     
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  4. MTR

    MTR Well-Known Member Premium Member

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    Perth, Melbourne, USA
    A side issue, if you buy new unit then you could be looking at as much as $7000 in depreciation, and may be worth considering?
     
  5. D.T.

    D.T. Adelaide Property Manager Business Member

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    Location:
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    Corporate fees only applicable if property is strata or community titled

    Mortgage insurance is a once off expense not a weekly one

    Depreciation helps

    Real estate fees might be 5% in parts of Sydney but that's about all

    Landlord and building insurance average say 800 a year

    For positive cash flow, generally work on needing about 6.5% yields in Adelaide, 7% in Brisbane and forget it in other mainland capitals.
     
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