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Do your properties pay you?

Discussion in 'General Property Chat' started by Ace in the Hole, 26th Jul, 2016.

?

Are your properties self supporting?

  1. Yes, never have to contribute own funds to hold my properties.

    23 vote(s)
    54.8%
  2. No, I have to put my own cash in regularly to support my properties.

    19 vote(s)
    45.2%
  1. Ace in the Hole

    Ace in the Hole Well-Known Member Premium Member

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    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?
     
  2. Biz

    Biz Well-Known Member

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

    Peter_Tersteeg Finance broker and strategist Business Member

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

    MTR Well-Known Member Premium Member

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    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%..
     
  5. D.T.

    D.T. Adelaide Property Manager Business Member

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    Absolutely, would cull them otherwise
     
  6. hash_investor

    hash_investor Well-Known Member

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    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 :)
     
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  7. MTR

    MTR Well-Known Member Premium Member

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    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.
     
  8. Perthguy

    Perthguy Well-Known Member

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    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.
     
  9. barnes

    barnes Well-Known Member

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

    Beano Well-Known Member

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    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 )
     
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  11. Beano

    Beano Well-Known Member

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    Why not run a survey 8pc 9pc 10pc 11pc etc
     
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  12. Lacrim

    Lacrim Well-Known Member

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    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
     
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  13. wobbycarly

    wobbycarly Well-Known Member

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    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.
     
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  14. Cactus

    Cactus Well-Known Member

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    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.
     
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  15. wobbycarly

    wobbycarly Well-Known Member

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    LOL - OK so I got confused with the negative positives paying :)
     
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  16. Perthguy

    Perthguy Well-Known Member

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    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.
     
  17. Gockie

    Gockie I'm an ISTP-A female, so I might be a bit quirky! Premium Member

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

    Perthguy Well-Known Member

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    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.
     
  19. wobbycarly

    wobbycarly Well-Known Member

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    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?)
     
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  20. marty998

    marty998 Well-Known Member

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