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Do cf+ ips still exist if so where ?

Discussion in 'Where to Buy' started by Drunkanbarbarian, 17th Aug, 2016.

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  1. Drunkanbarbarian

    Drunkanbarbarian Well-Known Member

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    Hi im interested in buying a cf+ ip , can they still be found ? If so where which suburbs?
    I was thinking maybe in the cheaper parts of logan :woodridge , kingston. But that boat may be gone not sure.
    Is there maybe another area that you guys know of ? Let me know
    Cheers!
     
  2. MTR

    MTR Well-Known Member Premium Member

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    The question is whether they will be cash flow cows or duds after expenses, older properties cost more to maintain that is the issue. You may make $1000-2000 pa??? however, you could also be sacrificing $1000-2000 cash flow pa for potential upside/growth in an area/suburb that is on the move.

    I am not a fan of these unless you can manufacture growth/add value ie renovate, develop. I know there are a couple of investors who are doing this in cheapie areas, but they also wont be selling because it wont work after all costs, not an issue if you can access equity.

    Capital first
     
  3. Corey Batt

    Corey Batt Finance Strategist Business Plus Member

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    Outer Adelaide suburbs, Hobart and regionals - listed in my order of preference for overall potential.

    Balance cash flow potential with capital growth potential - you don't want to chase yield at the expense of everything else and end up buying a unit in Broken Hill. There's still very much quality investments in metro capitals which can make good all round investments, especially with the current low cost of funding.
     
  4. Drunkanbarbarian

    Drunkanbarbarian Well-Known Member

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    Okay then , give me a example for a suburb of what your speaking off.
    Cheers
     
  5. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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    Perth soon :) if applying the right strategy and selecting properties that people want to rent within a week of listing!
     
    Last edited: 17th Aug, 2016
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  6. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    Simply focusing on cash flow is a limiting strategy (as is focusing on capital growth). Furthermore many people only look at the loan, decide the rent covers it but don't consider the other holding costs (rates, insurance, maintenance, management, etc). At the cheap end of the market, holding costs don't tend to scale downwards so well and what people think is cash flow positive might actually be cash flow negative.

    Also consider that if you're making $50/wk cash flow, this might become negative as interest rates start to risk (which eventually they will). Other holding costs will also increase with inflation.

    It's also going to be difficult to execute a retirement plan when your cash flow is $50/wk. You'll need a lot of properties to replace a job.


    I perfer to focus on growth. Not just capital growth, but rental growth as well. Places that are affordable but with high ongoing demand. This might mean the property is cash flow negative when it's purchased, but it also means that it will become cash flow positive reasonable fast and it keeps on getting better. As a bonus the capital growth will give you the equity to continue to invest.
     
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  7. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    One of my clients got one in Darlinghurst Sydney and another in Paddington which is casshflow positive after tax.
     
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  8. MTR

    MTR Well-Known Member Premium Member

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    Can you give me an example of a cash cow deal? suburb

    I will only speak from my experience with a Nerang QLD property I purchased which should, could have been a cash cow, dual occupancy. I should have been in front by around $10K pa from my research.

    However, the property was build around 1970-80, maintenance issues were thick and fast, this of course eroded my cash flow.

    Another issue I had no idea would occur due to my inexperience in this market, I assumed that dual occupancy would rent out immediately, unfortunately this did not happen.

    When a vacancy occurred it would on average take approximately anywhere from 6-12 weeks to rent out... cash flow gone.

    How many investors would even come close to $10K pa cash flow?? I think I did some sums on a cash cow in Adelaide making around $2000, that is not huge, especially if we are talking older property.

    I sold my Nerang property because I saw this as a lemon, and I wont hold lemons.

    MTR:)
     
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  9. D.T.

    D.T. Adelaide Property Manager Business Member

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    My personal props in WA and SA are all cf positive, don't see why it can't be done.
     
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  10. Drunkanbarbarian

    Drunkanbarbarian Well-Known Member

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    Ur not a fan of logan ?
     
  11. HUGH72

    HUGH72 Well-Known Member

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    Nerang is GC.
     
  12. MTR

    MTR Well-Known Member Premium Member

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    I just settled on my 4 townhouse development in Thomastown 17 km from cbd Melb, the buyers have made perhaps 10%? gains, no/reduced stamp duty and with depreciation they were cash flow positive. These attracted investors and FHB

    I would much prefer this type of deal/product if I was specifically chasing cashflow. Just a suggestion.

    If looking OTP (off the plan) make sure there is no more than 4-6 in the complex and look at comparable end sales, same product, must be new
     
    Last edited: 17th Aug, 2016
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  13. joel

    joel Well-Known Member

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    I know someone who has 2 in Adelaide, yielding 8.7% and 6.3%, the first paid for their second
     
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  14. Drunkanbarbarian

    Drunkanbarbarian Well-Known Member

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    When did he get the first ?
     
  15. joel

    joel Well-Known Member

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    6 months before the second, Dec 2015
     
  16. Tony Fleming

    Tony Fleming Well-Known Member Business Member

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    As others have stated Adelaide and Regionals are the place to be for cash flow. Even Sydney if you are a keen renovator :)
     
  17. Taku Ekanayake

    Taku Ekanayake Well-Known Member

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    guys what is considered CF+ in this current IR climate?

    are we talking 7% yield min. for a true CF+?
     
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  18. Tony Fleming

    Tony Fleming Well-Known Member Business Member

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    Cash flow is cash flow in my opinion. My portfolio is at 9.18% yield so happy days.
     
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  19. Taku Ekanayake

    Taku Ekanayake Well-Known Member

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    @The Dark Knight very good! do you divide rental income over purchase price (only), or do you include reno costs, stamps, buying cost also?
     
  20. Tony Fleming

    Tony Fleming Well-Known Member Business Member

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    I don't include stamp duty or purchasing costs. I do include Reno costs though and at purchase price.
     
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