First IP 400K budget bordlerless cashflow positive

I have a budget/ borrowing power for 2 x 400K loans to purchase my first 2 IP’s and am looking for properties that are cashflow positive to increase my borrowing power for higher loan amounts down the track

These would need at least $350 rent to match what is needed for lending

I was originally looking into the Brisbane/ Logan region when i came across this site last year as that seemed to be the area you could find good deals in that were cash flow positive however it seems the prices are rising so my thoughts are to start looking elsewhere

Where would you look to purchase based on the budget I have that would be a good building block for a portfolio?

I would use buyers agents to source them so any recommendations of BA’s or stories would be appreciated

Has anyone been in a similar scenario where the strategy they needed was to chase cashflow up front in order to improve lending for a higher amount?

 

It would be VERY hard to find cashflow positive properties now especially if we are talking NET. The rises in 2021 were the biggest in 30+ years or I think ever in history - Maybe in the outskirts of Perth it can be done.

 

Yes Perth was one area that I’ve seen some positive talk about.

The Rockingham or Perth thread (can’t remember) seems to mention positive things for good rental yield for not a big purchase price in those surrounding areas of Perth and not too far form the beach

 

Why not Logan?

Still some properties getting 5% - 400k with 400pw rent
Probably come out to 280-300pw (3.5ish%) net after all expenses except borrowing

Guess just depends on how cheap you can obtain finance

 

Positive on IO is doable for sure, positive P&I yeah nah.

 

Hey i just added in my original post to give more information, These would need at least $350 to match what is needed for lending

I will keep looking there though

I guess i just didn’t want to put all my properties up there if I didn’t need to to diversify

 

Logan is still possible, have a look at areas like Beenleigh.

Perth has moved substantially already too 400k is not going to get you close to the beach in Rockingham. It'll be further out east in lower social economic areas. Maybe you could do Port Kennedy though. Rockingham seems flooded with investor activity though, right now everyone outbidding each other for properties are Eastern investors. I'd be wary of that, you could be swimming naked once the tide goes out. On the ground demand in Logan seems more OO driven. Just my opinion from speaking to a lot of BAs and agents and PMs

 

Less and less 400K investment grade properties with positive cashflow in capital cities.
Maybe few left in Logan but.. often there are reasons. Still under 400k in Elizabeth region SA but .. Do you really want?

Probably more options under 400k in Perth, Shepparton VIC, Moe/Morwell VIC, Bundaberg, Townsville and Rockhampton QLD.

 

Is regional the only option for CF positive now?

 

Are you sure you wouldn't want to buy 1 quality 800k IP instead of 2x400k. Half the rates, insurance, etc.

Have a chat to a broker with specific numbers. 2x400k that are mildly CF positive won't necessarily increase your borrowing power.

 

I have no idea that’s why I would use a BA to source the right deal

 

Yes I am sure I have discussed both options with my broker and it’s due to my borrowing capacity

The 2 loans are not with the same lender they are 2 different lenders and not big 4 type

a big 4 would be used later on based on my circumstances hence 2 lower loans first

 

following along here.

I’m in an identical position with a very similar investment strategy.

I’m in the early stages of research but have found some good cash flow positive options in Albury. Problem here is long term CG is sub 5%

Im deep in research mode and looking to buy 3-4 this year.

Keep posting with your results and updates cheers

 

Remember you need to buy properties that provide both cashflow and CG.

If you hold for 20+ years for the cashflow but there is ZERO growth your not going to be happy or be rich. If your looking at small towns or remote locations I'd be very careful. Much safer buying in a major city.

You may have to settle for slightly negative cashflow properties because in all honesty you left it too late. Only 1-2 years ago Moreton Bay, Logan, Ipswich could easily offer you the positive cashflow your after yet also give you massive amount of capital growth. Even in many suburbs of Brisbane council offered this.

I know many ppl that bought in Logan for $270k a house, receive $380 per week currently in rent and now their house is worth $500k-$550k+. THAT is the ideal situation you want for any investor.

Best of both worlds and zero holding costs + potential depreciation benefits to tax. Cant get better than that.

 

So you need to see how much CG there has been in the last 10-20-30 years and if it's less than elsewhere, that could be a good thing.

• Is Albury at the beginning, middle or end of its cycle?
• How is it affected by the major capitals? Investors? Pandemic FHBs and downsizers?
• Are there jobs in Albury? More or fewer than 5 years ago? 10 years ago?
• How is the refugee migration to the area? What educational / settlement prospects are there? Are there jobs for new arrivals - cleaning, meat works, farm work, truck driving, retail, food delivery, supermarkets?

There are also different parts of Albury. Depending on your apetiite, it's best go steer clear of certain areas. You absolutely MUST see the property and the street first hand. While the house you're looking at may have been renovated beautifully, the house next door may have been burned down at the last eviction. It's ideal to buy as close to CBD as possible in a smaller city, but this is not always true.

 

Does cashflow property come in cycles too? Or have real estate prices in Aus gotten to expensive and rising interest rates will mean that strategy won't be viable moving forward?

 

I think that strategy is still viable. People often see Negative/Positive geared properties as black and white. But is a property being -$5 a week really that different to one that is +$5? It all really depends on your overall cashflow position and trying to get the most CG.

 

Townsville. Recently bought a 4 bed $365k and rent will be $420pw. Or Mackay development site $360k 1000m2 block with rent potential at $440pw.

 

What suburb in Townsville?

 

TW and FNQ arent cash positive. insurance + rates are huge. + aircon expenses yearly for sure.