Is this positive cashflow?

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kylesbm
Member
@kylesbm
Join Date: 2003
Post Count: 8
February 6, 2004 - 5:03 pm
Are these positive cashflow?
1st.
Listing price $70000
rents at $110 per week
Rates $1100 p/a
Body corp $320 p/a
I have worked it out like this;
Purcahse property @ $60k with 100% finance @ 6.48% =
$324 p/m IO
Rates p/m = $91.66
Body Corp p/m = $26.66
Total Outgoing p/m = $442.32 IO
Income = $110 x 52 / 12 = $476.66 p/m
Cash flow = $34.34 p/m
Have I forgot anything?
Obviously if I put in 20% deposit and had a loan of $48k on a purchase of $60k, it would be much better.
$377.52 then would be repayments 6.48% leaving $99.14 p/m cashflow, if it was P&I though it would be $55.58 p/m @ 6.48, if it was P&I @ 7.07 it would $36.74 p/m cashflow.
Does this seem ok?
2nd
Listing price $48000
Rent @ $90 p/w
Rates $83.33 p/m
Body Corp $26.66 p/m
Total Income = $390 p/m
Loan for $40k 100% finance @ 7.07% = $268 p/m P&I or $235.67 p/m IO
total out = $377.99 p/m
Cashflow = $12.01 p/m
Once again I realize a 20% deposit, not 100% finance would make a difference and a lower interest rate.
But does this seem OK?
Mick INC
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@mick-inc
Join Date: 2003
Post Count: 43
February 7, 2004 - 2:12 am
Well it doesn’t meet the 11 second rule. And you haven’t factored in other costs like maintenance, periods of vacancy and initial costs to make it rentable etc etc.
Doesn’t mean it’s not a good deal though, depends on location, vacancy rates, chances of capital growth, new infrustructure etc.
Maybe I could suggest buying Steve’s “Buyer Beware”, at just $99.95, it could be just what you need and save you thousands to boot.
Mick
kelvinh
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@kelvinh
Join Date: 2003
Post Count: 37
February 7, 2004 - 5:10 am
No its not positive cash flow…
once you factor in all the cash you’ll out lay it will be costing you money..
e.g.
insurance, prop manager fee, repairs, etc etc
BUT it does cover the mortgage payments at current interest rates…
rest is pretty much as Mick INC stated…
peterp
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@peterp
Join Date: 2003
Post Count: 307
February 7, 2004 - 5:18 am
For #1, I would use something like the following figures:
Income:
$110pw x 48 wks = $5280pa
Expenditure:
Rates $1100 p/a
Body corp $320 p/a
add Insurance $300 p/a (contents & Landlords)
add Maint allowance $600 p/a
add Prop Mgr (10%) $550 p/a
Total Non-loan costs: $2870 p/a
OK, now to loan costs. Assuming you were buying for cashflow and not expecting capital gain, I’d question the merit of going interest only.
$60k P&I 30yrs @ 6.57% ie $4584pa
Total Income: $5280 pa
Total Costs: $7454 pa
Total Loss: $2174 (ie $181 pm)
Tax deductions might reduce this to $1500 or so assuming you have other income.
Even if you can claim building depreciation or furnish the property (for higher rent) it would be hard going to get a positive result, even after tax.
Regards, Peter