whats the percentage of cash on cash return if you are investing for +ve cf IP in regional area? say 400kms from the city? I am looking for 13% and above, but most of them are below that. is that a good call? the area is not bad, last year median price change +10%? opinion?
Interesting, 007. Which city and direction?
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][][}][][}][][}][][}][]hi milen and celivia
the issue of cash on cash return is a great one but it all depends what sort of deposit you put into the deal.
personally i’m after a 25% Cash on cash return after i put in the 20% deposit. this is real cash flow. unfortunatley the 11 sec rule will often not even present cash positive.
westancelivia, its regional victoria.
westan, 25%? hmm good return, may i ask which part of australia?
anyone else? 13% good enough? what do you think?
i will disagree, many of the +ve cash flow properties i have purchased, i have been able to use 100% equity and only have had to pay for was legals and stamp duty.
Most the properties i have purchased at 100% equity that are +ve cash flow are between the 25% – 51% yeild return a week or annual, 13% is good but take into consideration does that also cover your council rates and land tax, you dont want to pay for that do you, keep lookin you will find properties that bring in a higher yield return.
WOW!
51% yield!!![
]i was just wondering still-in-school, where did you invest? not that i want to be fed all the information on a silver platter, but that sounds amazing!!![
]could you maybe give us some figures to show us how you did it[?]
thanks
[
] Powmow []sure can hold on
Here you go Powmow
ok here how it works,
i purchased the property for $43,000 my interest rate is 5.25% over 30 years but that is fixed/variable but i have 3 years fixed
so the bank wants $59.36 a week my property rents at $120.00 a week
To work out the yield this is how you do it, and this will still appy to 1 week to 1 year as the amounts are still the same.
my positive passive income on this property is $60.64 a week divide that figure by $120 which is the rental and the yield profit return is 50% but if i was to get technical and round the figure up to the nearest percent as the actual answer was .505 it would be 51%
though i am very different to how steve preaches,
i like to invest my passive profits into negative geared properties i have.
Doing it this way i dont have to fund these propertys at all or any other outer pocket expense,
Also doing this, i have learnt that were you make a profit you have to make a loss, (to me doing this i can maximise my tax return and give myself a tax break and still profit with no loss or very very little lost).
Hi Still in school
How is your positive cashflow $60.64/week what about all the other out goings?
How did you get a 30yr loan at 5.25%.
Note again this is well over the 11 sec
rule
Erikahey still,
i, also like erika was wondering is that with PM fees, rates etc taken out [?]
because that surely would have to eat away a little bit at the amazing 51% yield [?]
[
] Powmow []soryr guys, they havent been take out, but when i look at property, i look at it how much money it would put in my pocket a week and how i can invest that money, all monies i make i dont touch,
ok to clarify what you guys said all those extra expense im not worried about, yes they may be outer pocket expense but they are claimable on your tax return, another thing to, if you have a few IP that your real estate agent who manages your properties for you,
you can ask them to charge you lesser fees as they are gettin a bulk deal from you or tell them about another real estate manager in the area is willin to charge lesser fees again. Most are happy to bring the fees down. But also talkin to other real estate agents and askin if they could do better than the management fees you are being charged, are willin to do a better deal.
Sorry to explain the loan i think my explainin was a little wrong,
my loan is fixed for 3 years at 5.25% and after those 3 years it will be variable, so for the time being im basing this information at the current interest rate
thanks for barin with me guys
hi all
still at school
you aren’t working out the cash on cash return, sorry you are fudging the figures and deceiving yourself.
let me expain it to you. the cash on cash return is what you actually put into the deal and what you take out of that as a percentage.
lets use your example
say you buy a property for 42k you will have
loan interest you say about 60pw
then rates/water say about 15 pw
then insurances 4pw
agents fees at 7% 9pw
total costs 88pw
profit $32 per week at best not including vacancies, repairs etc.
so that is $1664 per year. then you divide the figure by how much cash you put into the deal. if you financed at 100% and only paid costs of say $1500 then the return is 1664/1500 so a 110% return. this is where a cash on cash return can be misleading because it only reflect what you have put in. if you put in a 20% deposit the return would be more like 25% still great in my opinion. the problem with putting no cash into a deal is eventually banks will not lend to you as you have no equity in the properties.
regards westanThanks Westan, i will take a note of what you said, i do take what you say into consideration and use the same approach as what you have said when investing.
thanks for pointin it out
hey still in school
120pw for 42k thats a great deal similair to what i’m going for. is it in OZ?
westanHey Westan, yeah that deal is here in australia, though that is my best cheapest deal, though the second cheapest i have is $58,000 they are here to find but there there like findin a pin in haystack the real cheap ones, but theres plenty of $80k – $120k though they are just neutral properties, but it give it a shot and im sure you will find plenty of properties under 65k that are still have good returns.
Though i think as well steve book had some infulence over people and sooner or later they will be even much harder to find.
i think it wont be that way, not all people willing to take the actions, thats make the diffrent of people that successful or not.
so, any other input of whats your yield on +ve CF IP? as I need some opinion to make up my strategy as i guess that 13% cash on cash return is good enough or not.
hi milen
whether 13% cash on cash is good enough ???
if there was some chance of capital appreciation or adding value to the property, otherwise i’d need convincing.
westan
hi westan
i recon that the capital gain is minimal as its +ve CF IP, my guess would be around 3-5%
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