Do your properties pay you?

1. Relating to properties only, no other assets.
2. Gross figures, (not counting depreciation or tax refunds).
3. For a period of the last 12 months.

This poll is simply to gauge if you have to dip into your own pockets on a weekly/monthly basis to support your property portfolio.
Basically, have your property rents exceeded your regular expenses, before tax, in the past 12 months.
i.e. Are your properties self supporting?

 

I think positive / negative gearing is how they define this in the vernacular.

 

With rates this low, even my tax return says I'm making money from my portfolio!

 

We are currently in a historically low bank interest environment, what would be interesting is a pole on whether properties are self supporting at 8%..

 

Absolutely, would cull them otherwise

 

Not really. I would be happy with properties not paying me back in an 8% interest environment because I will be making a lot more in that case and won't worry about future job prospects as well. An 8% interest environment means high inflation and money running rampant

 

Its totally dependent on many factors, still comes down to debt vs cash/flow, income and if using equity to service debt, compounding debt will kill investors.

 

Generally but no exactly. You need to consider depreciation, which can send a positive cashflow property negative at tax time. So in that case your property would be paying you but it would be negatively geared. I would guess that this would not be a common situation though.

 

Yes, I have to put my own cash in, but it'll end soon, after the sale of the last one.

 

Yes you do have to take into account asset/capital expenditure (which is spread over several years as depreciation) as part of the cash flow
I average $155k each year (its the depreciation )

 

Why not run a survey 8pc 9pc 10pc 11pc etc

 

DT, I know why you're saying this but that would generally rule out purchasing anything over $250-300K as an IP - that's not a hard and fast criteria that I would apply....even though yield is important. For example, one of my Sydney IPs is currently worth $1.6 mill give or take. It was purchased for $625K. From recollection, it initially rented for $450/480pw - bleeder from day 1

 

I think you have that back to front - it could be negatively geared (costs you a little bit each month), but then depreciation in your tax return (or via ITWV) makes it cashflow positive.

 

Nope he had it the right way round.

On paper after depreciation a loss.

In reality cash flow positive.

After tax return even more positive.

 

LOL - OK so I got confused with the negative positives paying

 

I have never claimed depreciation for a property so I can't be 100% sure but I think I have it the right way around. At tax time a property could be cashflow positive but negative after depreciation.

 

Just an observation. I have recently noticed that there are so many people on the forum who don't claim depreciation.

 

I asked my accountant about mine but due to the ages of the properties and lack of recent improvements, there was nothing to claim. I have only bought run down old dumps then fixed them up to rentable standard. Not much room for depreciation with properties like that.

 

You might be surprised if you got a QS in, instead of relying on the word of your accountant, as the improvements will be depreciable (depreciatable?)

 

Err... no they don't pay me yet. But one day they will.