Recommendations/examples of net positive cash-flow IPs?

Discussion in 'Investment Strategy' started by masterjoe91, 13th Jun, 2018.

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  1. John_BridgeToBricks

    John_BridgeToBricks Buyer's Agent Business Member

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    You are right TMNT. But blue chip rents grow, and it is the growth and the compounding that is going to make you rich.

    When I am buying for myself or for clients, I try to see past the first two years, which are always the most difficult.

    Kind regards,
     
  2. TMNT

    TMNT Well-Known Member

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    I personally wouldn't put too much focus on the rental growth, but more the cg.
    Due to my past experiences I will modify my strategy to focus more on bluer chips for future
     
  3. John_BridgeToBricks

    John_BridgeToBricks Buyer's Agent Business Member

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    As a complete non-property related tangent but relevant nonetheless:

    The main reason why people find property so difficult is partly the monetary system, but also partly because we get married too late these days. In fact, much of our adulthood is delayed and our adolescence perpetuated.

    I am always intrigued that young people want to delay all of the responsibilities of adulthood (jobs, family formation, marriage, kids etc), but want to bring forward property ownership. Very selective.

    Over to you....
     
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  4. New Town

    New Town Well-Known Member

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    Its difficult to achieve cash flow positive IPs in Oz. That's why almost all our responses here are on the theory o_O

    Examples where you might get pos cf on borrowing say 80% are:
    - cheaper regional properties with 9% gross yields, at rents preferably over $250pw
    - in metro areas, houses with a granny flat or bargain buy with Cherie Barber style make-over (but bought prior to the boom) on 7% yields
    - block of four flats or maybe duplex in regional area
    -
    -
     
  5. TMNT

    TMNT Well-Known Member

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    I don't get what so difficult about it!

    Save deposit, find what you can afford, buy!
    If you can't afford it, you're expectations are too high
     
  6. John_BridgeToBricks

    John_BridgeToBricks Buyer's Agent Business Member

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    True, but the media seem to talk about housing affordability a lot.
     
  7. rjw180

    rjw180 Well-Known Member

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    In the last few years this would have worked against you as prices were going up faster than most could save. This is starting to make more sense again.
     
  8. strongy1986

    strongy1986 Well-Known Member

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    well one reason I could think of is that being married, having kids and possibly only one income makes it very hard to obtain a decent sized home loan
     
  9. ellejay

    ellejay Well-Known Member

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    You're pretty much wasting your time posting examples of cf+ properties on here (unless you're MTR and buying in US). No matter how many examples of great growth you post people will not believe it and will tell you that you didn't get great growth. I've given up. People need to be able to think and invest creatively and be open minded. You can make good money every day of the week on a non metro property. Just looking forward to $40k profit on the sale of an ip in woop woop this month. Sold one last FY for $60k profit and they cost nothing to hold, AND they gave me a few dollars back to cover costs even on p&I AND because they didn't cost to hold I can hold a double figure portfolio and not be tied to a job. AND sell one every year or two to release a nice cash sum..AND I can keep buying and accessing different markets and strategies..but hey its a bad idea apparently.

    Oh, and I also know plenty of people with two or more cf- ips who have not had the growth I've had, are tied to their jobs servicing loans and are looking to offload because they are definitely not on the road to financial freedom. It can work both ways.

     
    Last edited: 20th Jun, 2018
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  10. strongy1986

    strongy1986 Well-Known Member

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    Do the capital gains cheer squad factor in the real cost of the extra years of work they do to become 'financially free'?

    a lot of people on this forum could be financially free right now if they wanted to
    instead they will just reinvest into another 2% net yielding asset and work another 25 years until their $2mill is $5mill
    They will retire very comfortably and have their financial freedom but for the majority they will have also sacrificed a lot of their own time working for someone.

    the cash flow vs capital gains argument is stupid anyway because most cashflow property areas will at some stage have their own boom which gives you an opportunity to take money off the table and invest elsewhere

    I do think that if your into cashflow properties however you need to be a little more elastic as many of them require a renovation immediately after purchase and it makes little sense to pay someone else to do it. So if your a corporate high flyer or run a successful business then it will not work for you - which is where I think the negative sentiment comes from (people buying cheap cashflow but not putting in the initial effort to bring it up to scratch and then getting constant shoddy maintenance done)

    for the record I own both negative and positive properties but only buy negative properties that can be subdivided or developed
     
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  11. hobartchic

    hobartchic Well-Known Member

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    A lot of people still want to own a property before they have children or get married. It's one of the core reasons that marriage, kids, family formation are delayed.
    The data on jobs show that youth unemployment is high, higher if you take into account non capped University and Tafe places. Then of course, having uncapped places the government has deregulated plenty of jobs making the qualifications expensive and worthless.
     
  12. sumterrence

    sumterrence Well-Known Member

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    Again as I've mentioned previously, good capital growth is critical for sure, but the growth is only "real" when you sell.

    And the fact that over the years of holding onto this "growth" asset you are actually compromising your life style due to the NG outcome, a CFP investment could give you a much better financial achievement at the end of the day.

    Even if the CFP asset does not grow a cent in value, by paying down the principle you eventually scored yourself a passive income at retirement. Don't forget CPI also contribute to a certain degree of rental increase, which will accelerate your principle repayment.
     
  13. TAJ

    TAJ Well-Known Member

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    A mixture of both capital growth property / properties with cash flow properties generates a good balance. Turning the negative geared property into a positive cash flow property asap has been a rewarding strategy I have used to, lets say, get ahead. By no stretch of the imagination has this been easy.
     
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  14. MTR

    MTR Well-Known Member

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    Oh that old chestnut.... CG vs Cash flow.... you need both, and its a catch 22, you need capital to build/increase cash flow

    Here is a link that may interest some

    Grow Capital First
     
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  15. New Town

    New Town Well-Known Member

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    I agree with Ellejay, but its a numbers game and you have to have the stomach for 10 or 20 properties. So not for feint hearted
     
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  16. Sackie

    Sackie Well-Known Member

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    You do need both, 100% agree. But a couple on 180k+ looking to build an asset base does not need to look for woop woop neutral places. Everything needs to be put into perspective. I have no issues with CF Pos properties at all, but there is a time and place for it.

    The pursuit of growth/equity is not one to be back seated to CF pos places IF the individual/couple have other options for their situation. One property with good growth over a 7 year period would kill any $30/week cheapie. Also my sense is @ellejay is not your average CF investor and has a wealth of investment knowledge to back her buys.
     
  17. MTR

    MTR Well-Known Member

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    What's an average cash flow investor? I don't know? not trying to be silly, just not sure what you mean.
     
  18. MTR

    MTR Well-Known Member

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    Some interesting ways to achieve both cash flow/CG in Oz was buying cheapies in Mt Druitt for example and build g/flats at rear, this was very popular strategy.

    So the reason you could achieve both was timing the market, pretty much what @skater did, not necessarily building g/flats though.

    Those yields are now gone,
     
  19. Sackie

    Sackie Well-Known Member

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    An average CF investor person is a newbie who knows nothing about markets, growth drivers, strategies, add value, state cycles etc and just buys somewhere because some clown tells him/her that it costs them nothing to hold. There are tons of these people around. Worst yet, many were doing just that pre last Syd/Melb boom. On good incomes! This is a fact I know.
     
    Last edited: 20th Jun, 2018
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  20. ellejay

    ellejay Well-Known Member

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    Correct I didn't just buy any old cf+ ip. Had to 100k population, 8% gross yield minimum, no major work needed but room to increase equity/rent. I have a few -cf ones but could only buy 4 or 5 so bought the cheapies in between. Funny thing is the boom rippled out to woop woop so I made much more gains by mixing it up and buying more properties than if I'd have just bough so called growth ips.
     
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