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Yes dead right Ben,
Anywhere where you can get more than one income stream from the one purchase/piece of land you have a far better chance of being able to achieve higher yields and positive cashflow.
In fact in my portfolio, i only have one single tenancy property (3 bed house) all the rest are either houses with minor dwellings, or even better still, my personal favorite – blocks of units/flats, 4 x 2 beds, 10 x 1 beds, 11 x etc.
The beauty with these is when you increase the rent by $30 per week, over all 10 units in the block it equates to an annual rental increase of $15,600, try and do that with one 3 bed house!
Of course a block of units doesnt get valued the same way as a home. But it gets valued on Cap rate (Capitalisation of the rental income) the same as a commercial property does.
So assuming a yield/cap rate of 7.5%, by raising the rents by $30 pw over 10 units you have also increased the value of that property by a massive $208,000.
You can see how this can get quite exciting very quickly, particully when you buy a block of units that is currently under-rented, and all you do is lift the rents to market rate and get a whopping increase in cashflow and gain in value.
I hope i have made some of you think beyond the stand alone house
Great post quickchick!
It sure does work
To find positive cash flow deals you first have to be open to it, and believe that they are out there. I have seen it many times before – If you dont think it is possible, then you wont find them, or be able to create them.Hi there Suchy,
As a few others have already mentioned, there are several different ways to skin the investing cat so to speak, all have their place.
But at the end of the day, it is very hard to beat long term buy and hold type investing, done correctly this is the way to long term sustainable wealth, that can be built and passed down thru the generations.
It is pretty hard to go wrong if you buy well located income producing property, even better if you buy well (at a discount) and are able to get a surplus positive cashflow from day one or after doing some renovation work etc.
Trading is ok, but you only make money the once and you have to keep doing the deals to make money. My suggestion to people is that if you are active in the market as a buy and hold investor, you will inevitably come accross deals now and then that you dont wish to purchase yourself, but there is still a dollar to be made by trading it on to someone else. This works out well, as you end up with big chucks of money to use as deposits for more buy and hold properties for your own portfolio.
Right now is a really good time to start, as there are plenty of oppuntunities around to pickup good properties at reasonable prices. There are a few key things that you need to understand tho, to stop you falling into the same trap that many newbies did towards the end of the last property cycle.
Best advice i can give you at this stage, is before you invest in a property, invest in yourself – It will repay you forever!
Yes there sure are currently some excellent opportunities to purchase quality properties, which if bought well can offer some pretty good yields. We just contracted two such properties yesterday.
Have actually just come back from inspecting one of them, and we are amazed how good this property is, and the fact that it is one of the best capital growth areas in the City, and it will be positive cash-flow pre-tax
