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Positively geared properties under $300k in Australia

Discussion in 'Where to Buy' started by AlbertWT, 25th Jul, 2016.

  1. AlbertWT

    AlbertWT Well-Known Member

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    Hi everyone,

    I have just got my pre-approval letter from my bank that I can borrow up to $310-20k maximum.
    I was just wondering if it is possible to find positively geared investment property in Australia ?

    Because based on my understanding, if the house is generating cashflow now, why would someone sell it ?

    Does positively geared property in the first year is usually not a good property to invest due to the location and risk associating with the location ? eg. Regional property

    Any help would be greatly appreciated.
     
  2. Lincsus

    Lincsus Member

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    You can find positively geared properties in Adelaide and Brisbane and probably other cities (which are not Sydney or Melbourne) as well. There are a lot of reasons why owners will sell positively geared properties. The property may not be appreciating, economy of the area where the property is may be going down, and so on.
     
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  3. Tony Fleming

    Tony Fleming Well-Known Member Business Member

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    Agree Brisbane and Adelaide for capital. Regional NSW is definitely possible as well.
     
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  4. D.T.

    D.T. Adelaide Property Manager Business Member

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    Playford LGA
    Salisbury LGA
    Onkaparinga LGA
     
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  5. AlbertWT

    AlbertWT Well-Known Member

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    Great,
    I thought that this is just the myth or someone spruiking this type of property.

    Thanks guys.
     
  6. House

    House Well-Known Member Premium Member

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    Is it CF+ before or after deductions?
     
  7. AlbertWT

    AlbertWT Well-Known Member

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    Doesn't matter. As long as it can generate cash to reduce the holding cost during the recession.
     
  8. Coota9

    Coota9 Well-Known Member Premium Member

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  9. House

    House Well-Known Member Premium Member

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    Is that the only reason you're looking for CF+?
     
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  10. AlbertWT

    AlbertWT Well-Known Member

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    @House Yes, what else would that be ?

    my understanding is that when investing the CF+ or high yielding property especially now before the recession, it is because to avoid the problem in paying too much when the interest rate are rising.

    Correct me if I'm wrong.
     
  11. House

    House Well-Known Member Premium Member

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    Obviously not wrong but you don't know when the next recession will occur.

    So say you go buy a CF+ IP (but no CG for the foreseeable future) that's making $100/wk. $5.2k per year before that gets taxed.

    But say you buy a $300k NG property instead that's costing you $100/wk- $5.2k out of your pocket a year before tax benefits. It grows 5% in the first year to add $15k to the value. No recession happens... Year 2 it grows another 5% to add $15,750. Recession happens :eek:

    You now have $30k+ of buffer/equity to use to pay the NG property for the next 3 years and save in the meantime ;)

    And if there's no recession you're doing even better.
     
    Last edited: 26th Jul, 2016
  12. D.T.

    D.T. Adelaide Property Manager Business Member

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    You're making it sound like its one or the other?
     
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  13. hash_investor

    hash_investor Well-Known Member

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    Just received an email from an agent trying to sell me a villa around Brisbane for $290K thats rented for $350 p/w. Pretty low body corp as well which means good positive cash flow.
     
  14. House

    House Well-Known Member Premium Member

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    Ah I was just about to edit my post and say obviously both is preferable but I wouldn't go looking for only CF at the compromise of growth.
     
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  15. AlbertWT

    AlbertWT Well-Known Member

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    @House, I got confused for a bit here.
    That property growth is just the number on the paper not something that I can use to reduce my LVR ?

    Do you mean by reducing the loan after asking the mortgage broker to do bank valuation when the recession hits ?
     
  16. Tony Fleming

    Tony Fleming Well-Known Member Business Member

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    As a general rule off thumb @AlbertWT I take the last 3 digits of the purchase price and aim to be about $75 more in rent so $100,000 purchase and rent is $175 than happy days. Might make property selection easier for you :)
     
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  17. AlbertWT

    AlbertWT Well-Known Member

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    Whoa that's awesome :), I'll try that.

    Property price: $310,000
    Rental: $350 which means to make it positive it must be $385 per week.

    Thanks for the tips.
     
  18. Bryan Loughnan

    Bryan Loughnan Well-Known Member

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    Just remember, any property can be 'cash flow positive'....... just put more deposit in............ Seriously though - as a property investor, you aren't purchasing a tenant and you aren't purchasing a rent roll. Over the course of 10 or 15 years, rental demand in ALL locations will go up and down. Rental returns are obviously important - as they assist in covering holding costs. But why are you really investing? Are you investing for cash flow today? Or are you trying to build wealth overtime so that at some point in the future, you will have the flexibility to leave the workforce without being reliant on the government funded pension? Just some things to consider.
     
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  19. AlbertWT

    AlbertWT Well-Known Member

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    @Bryan Loughnan yes, for the later (above) statement you mentioned.
     
  20. Gockie

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

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    Your LVR will decrease if your property grows in value
    You can pull out equity or you could sell if you are really stuck. This equals happiness. :)
     
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