Strategy advice

[QUOTE="MTR, not too concerned with growth really if I can maximise cash flow and pay off my PPOR in no time.[/QUOTE]

so how do you plan to fund the succeeding purchase? are you going to save up for a deposit and buy another property until you reach your target of 10 or more properties?

 

The general theme is stay away from service apartments, student accommodations, micro apartments and brand new glossy OTP stuff based on the locations you mentioned. Stay even further away if there's developer guarantee or rental guarantee of any sort.

a few hundred dollars of positive cashflow is easily wiped out by maintenance/ repairs or even with changeover of tenants and having it empty for 2 weeks.

rental growth will be non existent given the volume of available properties.

If interest rates goes to zero you might be laughing (but so will the rest of us holding any other type of properties), but if it goes back up to 5% (Let's not bother with 7% for now), there goes your cashflow.

 

Less interested in who your specific broker was, just checking they weren't a party with conflicting interests, so good to hear they are impartial.

It will be difficult to find a $400pm positive cash flow in residential apartment in melb/sydney CBDs I would imagine. There will be lots of places claiming to offer it but the pitfalls will be many.

Good luck with the search as you might find something, I would just be vary wary in this market space

 

I would suggest smash a few vodka shots... However, leave your chequebook at home..wouldn't recommend serviced apartments at all!

 

Aside from the serviced appt aspect .

IMHO , you won't be able to get units in a suburb like carlton which give you enough cash flow to pay off your portfolio in the forseable future .

Cliff

 

You need to think about your servicing with lenders too. Their internal servicing calculations all be factoring interest (with exceptions to differenct bank policies) around the 7%+ mark.
You will most likely hit a brick wall with how many you can buy in a short time.

IMO your calculations too ambitious ...

I would not be factoring my cash flow calcs based on current interest rates or whatever super special rate (3.99 or 3.74) is out on the market ATM...
If it was the case I would have scooped up another 2-4 this year myself already..

You need to work off an average interest rate.
Something around 6% give or take.

How does your cash flow look now?
Not pretty I bet! Positive CF still? Lol

How does the strategy of mass accumulation look based on this rate?

You didn't crack the code to the matrix mate haha. There is a minefield of issues to contend with that will test you long after you purchase.

Not trying to be harsh, I apologise if it comes a cross that way, however prudent, diligent and conservative processes need to be applied if you are to accumulate a substantial portfolio (with equity).

GG

 

Hey GG,

No need to apologise. I have pretty thick skin so I can take it, and I liked your matrix comment haha.

However, let's take the principal of the idea here and work with that. And please no one mention serviced apartments again lol! I didn't know it was until I looked it up, that's a peripheral and not part of the plan.

Ok, let's start with this. We all accept that there are purchases you can make with positive cash flow yes? Or is that in itself a contentious issue? Anyway, suppose you get a place with positive cash flow, you then increase that already positive cash flow by making the loan interest only.

You get enough of these and use them to pay off whatever you want to focus the cash flow on.

Is that a possibility?

Which areas are good for positive cash flow at the moment and have fairly low stable vacancy rates?

 

Everything is possible, but it may not be your best option. What a lot of people on this forum will tell you (me included) is that you do not want to sacrifice potential for capital gain for a few extra $$ in cash flow. My opinion is that it is best to get a combination of solid return (best you can find) with good potential for CG. If you can locate an area/property that gives you this it is going to be far better for your port folio in the long run. A lot of the people in the forum are concentrating on Brisbane and surrounds (Logan, Ipswich and Moreton) and Adelaide for this very reason. Strong returns and good CG potential.

 

Thanks for the advice and suggestions Mick. I thought I heard (or read) someone saying that Ipswich is a bit of a dump and flooded with oversupply, so high vacancy rates. I haven't verified though. Is there any merit to that?

 

@InvestmentNoob Hope not. I just bought a house there looking to settle in a week or so. People have a opinions on places that are based on their experiences and prejudices, it's not right or wrong, it just is.

In regards to what you were told, Ipswich is a lower socio ecconmonic area of SE Queensland, however, driving around comparable areas in the Brisbane area ie. Logan and Moreton Bay it was my preferred location,due to, prices not yet moving, lack of competition from buyers (this is changing already) and the place actually felt quite nice in certain parts. There is also a lot of money being spent in Ipswich.

Vacancy rates are not high. The house we secured was tenanted at $285PW but they were moving out. Have had it re tenanted at $295PW moving in on settlement. We bought it for $230K. We had 19 inquiries within the first week.

Flooding was all through the Brisbane area and not local to the dumps. Did you see the news with Suncorp Stadium under water? It went through a lot of the prestige suburbs.

Where have you been looking to invest?

 

@Mick Butterfield I just checked SQM, vacancy rate for Ipswich is around 2.1% so that's pretty good. I can't remember where I heard that. It may have been only units they were referring to. Anyway, I am no expert, hence my username!

Thanks for sharing your recent purchase experience, I find that kind of specific information most helpful. You hear a lot of vague general advice but when I see your figures, that it was tenanted in the first week etc... that is far more helpful.

Was that a 2 or 3 bedroom house that you purchased?

I am looking all over the place for investing and still doing my (very early) research.

My wife, however, wants to invest in Sydney, which is where we are from. I said maybe we can get multiple properties with one in Sydney. I feel like it's the worst time ever to invest in Sydney because we are at the top of a massive growth period, but I also think it will keep on growing slowly. I might actually post our scenario in a different thread and ask for some suggestions.

 

@InvestmentNoob We bought a 3 bedroom, high set home in Eastern Heights on a 700m+ block.

I can't say that investing in Sydney is a bad idea, only that I would not be putting my money there at this point. Have a look around some of the Where to Buy threads to help you narrow it down. A good start may be Brisbane and surrounds, Adelaide and even Hobart/Launceston. All of these areas have good fundamentals for growth and for me are much more attractive than Sydney. We are looking at all the areas I listed for another purchase later in the year. At this stage I am leaning towards doubling down in Ipswich but we will see.

What I will say though is make sure that you and your wife are on the same page. If you are doing it as a team make sure both parties are happy/comfortable with the decisions made.

 

Are these the returns from the franchisees?