Where to buy for high net cashflow

Discussion in 'Where to Buy' started by Luckysingh20, 4th Mar, 2020.

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  1. Luckysingh20

    Luckysingh20 Member

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    Looking to add positive cash flow property to my portfolio but seems like getting nowhere. Even spoke to couple of buyers agents and when they send deals it looks high yielding but once you consider all the costs it become neutral or slightly cashflow positive where one major repair request can eat away that cash.

    Whats the best way find something with cashflow.
    I am not much concern about growth for this purchase but dont want negative equity in future either. Budget 350k (max 400k). Looking to get some insight from experienced investors who owns these type of properties at different locations and can guide me in right direction.
     
  2. strongy1986

    strongy1986 Well-Known Member

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    this stuff does exist but only in small regionals

    also its not really for the passive investor, if buying this sort of property it will most likely need a lot of initial work as people only offload these properties when they forsee future maintenance issues
    so if your not hands on i would avoid
     
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  3. My House QLD

    My House QLD Well-Known Member Business Member

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    What net yield are you looking for to be cash flow neutral?
     
  4. The Y-man

    The Y-man Moderator Staff Member

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  5. Luckysingh20

    Luckysingh20 Member

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    Cashflow neutral for me is the property that cover P+I , + management+ repairs budget, + other compulsory outgoings ( insurance, council rates , water, 4 weeks vacancy)
    But if we buying for cashflow in no growth area then no point to buy neutral cash flow

    In my experience you dont put any money in pocket upto 8% net adding all of above. Anything above is positive cashflow. And again if you not putting at least 2% in your pocket, is it worth it???
    So 350k purchase 7k net cashflow roughly.

    .
     
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  6. Mark F

    Mark F Well-Known Member

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    Generally getting to positive cash flow is about length of time owned allowing rental increases to move it into positive territory or putting in more of your own money at the start.
     
  7. Luckysingh20

    Luckysingh20 Member

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    Agree thats the best and safe way to achieve positive cashflow.
     
  8. MTR

    MTR Material Girl Premium Member

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    What can work well is where you can add value. It could be a very simple development. Original house is maintained and build a new home at rear. This is one way of creating two income streams. Its also relatively low risk if the numbers work. Another way is reno the original home cut up the block sell the front and keep the rear build??

    Lots of options, but it means you need to upskill
     
  9. Luckysingh20

    Luckysingh20 Member

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    Thanks MTR , looks like i have to stop being lazy .
     
  10. My House QLD

    My House QLD Well-Known Member Business Member

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    The majority of the clients I buy for who are building large portfolios are doing their numbers on cashflow neutral on interest only plus costs, in area's that have a history of good capital growth over time.

    You can't find cashflow positive on P&I plus costs (from day one) because they generally don't exist in the larger cities on standard resi houses.
     
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  11. The Y-man

    The Y-man Moderator Staff Member

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    Joint ownership of these buildings in major capital cities (growth areas):
    Property Portfolio

    Yields $23.8k pa NET after all mamagement fees, interest costs, repairs, maint etc
    Charter Hall Direct PFA Fund

    The Y-man
     
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  12. Luckysingh20

    Luckysingh20 Member

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    Thanks Y man . Thats seems pretty good.
    Where can i find more info about it.
     
  13. MTR

    MTR Material Girl Premium Member

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    lol
    Networking with people doing this will be good
     
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  14. Luckysingh20

    Luckysingh20 Member

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    I dont mind going out of larger cities and get non standard resi house for this particular deal.
     
  15. The Y-man

    The Y-man Moderator Staff Member

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    You can request a PDS from the link I provided. More discussion about it and other funds in the earlier post I made.

    The Y-man
     
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  16. Momentum

    Momentum Well-Known Member

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  17. M_Chad88

    M_Chad88 Member

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  18. TMNT

    TMNT Well-Known Member

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  19. Blueskies

    Blueskies Well-Known Member

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    Why do you say that?

    Rent at $18200/yr
    Less $3200 rates and body Corp is $15k.
    Interest at 3.5% on 225k is only about $8k
    So $7k left for principal repayments + small surplus, plus maybe some depreciation deductions as well.

    I would think barring any major repairs or extended vacancies it would be at least neutral at P&I, what am I missing?
     
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  20. Todd

    Todd Well-Known Member

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    Rates would be about $1,600
    PM fees @8% - $1,456
    Water - $650 approx
    BC - $2680 (670 quarter)
    Insurance fixtures and fittings - $150
    Repairs and maintenance allowance - $500
    Interest - $8000
    Total costs - $16,686
    Rent - $18,200
    = Cashflow positive without a tax refund @ IO