Looking for advice on cashflow IP areas - I'm thinking QLD?

hello guys and gals! As the title says I'm currently in the market looking for a property that has positive cashflow for me. I'm looking to buy and hold for the long term.

I cannot for the life of me find a single property that cash flows positive. I have been looking around the Eastern coast of QLD from Gold Coast right up to Sunshine Coast. If anybody has any advice to throw my way that would be much appreciated! Or if anybody knows of certain areas that I can research into that have high Yields that would also be appreciated I'm not so much after the capital gains, just the strong rental yield. Thanks in advance for any information you can share!

 

Can I suggest the Corio/Norlane areas in Victoria. May just be +ve or slightly negative. What good's an IP if it doesn't appreciate in value though?

 

What deposit and rental yield are you using for calculations to get positive cashflow?

 

That is using technically no deposit because I will use a HELOC to buy the property. So the money will be all borrowed. I am looking to get a 6% yield to be neutral/slightly positive.

 

6% net yield ?
Do you allow for principal payments too?

 

I think most on here are talking gross yield, but I could be wrong.

 

6% is achievable you just have to know where to look and how to find the right properties in a particular area. PM me for more info or if you need help.

 

If you look further up the coast - say Fraser Coast - I believe 6%+ is still achievable.

 

ive seen a few around marsden/slacks creek areas, also up deception bay areas, this is based on IO payments and is also gross
have you looked into ipswich?

 

A bit hard to get a true CF+ property in metro bris at the moment - when you factor in all holding costs and maintenance estimates you'll be scraping it. There's still a bit of CF+ property in outer Adelaide suburbs and Tassie, otherwise if you go towards a neutral/slightly negative position you can get to outer Melbourne or Perth if you want to take a punt.

 

Still finding lots of CF+ properties. Here is an example of one I purchased for a client which just settled recently;

48 Dewar Drive, Loganholme, Qld 4129 - Property Details

Purchase price - $322,000
'Teething' works needed - $1500
Rented $410pw
6.62% Gross Rental Yield
821sqm corner block

 

What's the net cash flow look like on that purchase after all costs - some quick back of envelope calcs looks around neutral?

 

At 12% deposit and 4.5% IO it is $36.99/week ahead not including depreciation which I find balances vacancies/standard maintenance items over a year. This includes all costs including pool maintenance. The value add potential of a 821sqm corner block was also a big consideration with this particular deal

 

Ah that's probably where our numbers diverge - I used 4.5% IO too - but used the more general rule of full purchase price + costs @ the nominated rate instead of disregarding it, otherwise it doesn't factor in opportunity costs of the deposit funds.

 

Why are you chasing cash flow properties?, capital growth properties are the way to go. A few extra bucks in your pocket each week won't make you wealthy. Plus with positive cash flow you have to pay tax on it as well. So many people get this wrong.

 

I understand where you're coming from this - but I'd amend it slightly. A lot of people confuse that cash flow = poor capital growth, and therefore that a cash flow negative property will have strong capital growth - this isn't the case. There are cash flow properties with strong capital growth (which generally erodes their CF+ position based on their new values!), and there's plenty of dud negative cash flow properties which won't be going anywhere value wise.

The key is to find good investments which fit your long term needs - generally an increasing equity base is a good way of doing this but not the only way. Some may alternatively want to balance a portfolio with CF+ property with other growth assets in their overall portfolio.

I would say if you're looking at CF+ property, one stat that a lot of people forget to check is what the rental growth rate has been historically and likely to be in the future - there's no point making a couple dollars a week but have the rental growth flat line meaning the cash flow position doesn't increase with time.

 

I'm glad you agree for the most. Higher cash flow is typically in outer areas with lower capital growth potential. If your smart you can buy a high growth property and get good cash flow from it by renovating it.

 

The thought of an out of state renovation is usually too much for first-time investors. Add the fees for someone else to manage the renovation and pay labourers for tasks which can be counter-productive when you have to pay someone else to do it for you. Maybe next time round.

 

Fair point for a new investor, but I was not suggesting to renovate straight away. Buy a high growth property now and then look to renovate in a few years time say. You will of course need to afford the expenses to hold the property as always.

 

If you are after 6% gross yield I would suggest that is not particularly hard to find in SEQ. My LGA of choice would be Logan but plenty in Ipswich too. Throw a dart at most units or townhouses in these areas and they will exceed this but plenty of freestanding homes too. Lots of suburbs where you can pick up a house for near to $300k renting for $340-350