Is there a simple formula for calculating whether a property is positively geared?
We are looking at a property for $90000 with a weekly rental of $135.00, which is apparently a very good return but without putting down a $30,000 deposit the income isn’t more than expenses.
How is it possible to get a positively geared property using only equity (which means that you are still borrowing the full amount)?
Any suggestions or comments would be greatly appreciated.
Originally posted by Jaradnkaren:Is there a simple formula for calculating whether a property is positively geared?
We are looking at a property for $90000 with a weekly rental of $135.00, which is apparently a very good return but without putting down a $30,000 deposit the income isn’t more than expenses.
How is it possible to get a positively geared property using only equity (which means that you are still borrowing the full amount)?
Any suggestions or comments would be greatly appreciated.
Hi Jaredandkaren (which one is posting [biggrin])
Welcome to the forums!
I’m not expert by any means (I’m new too), but steve’s quick method is to divide the price of the property by 1000 and then multiply by 2 to get the required rent.
so for the property you are looking at you would require of $180 to be cf+. However you need to take into account other factors, such as location and other benefits the property might have.
Hope this helps..[biggrin]
In theory, there is no difference between practice and theory, in practice, there is….
Originally posted by Jaradnkaren:which is apparently a very good return
Just wondering where you go this information?
The weak will feed off of the strong until they are strong enough to be fed off of…
I don’t put any deposit down for properties. The bank loan is for 105% (loan plus costs). I figure you need a rental yield of somewhere over 15.5% to make it +ve CF without a deposit.
This will of course difer slightly depending on things such as body corporate fees, council rates etc.
Your $90K property with $135 p/w rental is only a 7.8% yield. This is a good return if there is capital cain to be had but definately not positive.
BTW, even with a $30,000 deposit it would not be positive.
‘Eat rich food, barbeque a yuppie’ [greedy]
Hi guys its me again.
Did the deal today.
4 brm home $32500
Rented at $160p/w
No money down.
Ah I love this game.
Russ[biggrin][biggrin][biggrin]Originally posted by RussH:Hi guys its me again.
Did the deal today.
4 brm home $32500
Rented at $160p/w
No money down.
Ah I love this game.
Russ[biggrin][biggrin][biggrin]Good on ya Russ![strum]
“Dont be looking in your back yard for a four leaf clover when the opportunity of a lifetime could be knocking on your front door….” “Even though you may be on the right track, you can still get run over if you sit there long enough”
RussH
stop boasting, it is sickening. You are obviously making to much money!!!! good onyaIf your after possitively geared property look over here in NZ…You can buy a house here for 90000 and rent it for that $180-190pw!!Drop me a mail if you want to know more
What province are we talking in Mike?
Regards,
SiDivide by 1000 and multiply by 2 ???
Why not just divide by 500 ???
Buy new!
Never Sell!ok einstein ,
Now without using a calculator work out the rent i need on a $67000 property by dividing by 500??
Well i sure as well cant BUT i can divide by 1000 and times 2….i think ….[biggrin][biggrin]Sooner or later the man who wins is the man who thinks he can
Well how about this
Double $67500 would be $135000So I would think you would need about $135.00 pw
Buy new!
Never Sell!Something I am not clear on here. What definition do you have for positively geared? If +ve means I can put down any deposit, then ANY property can be +ve. You can put down 100% on a real lemon but you get “no” return. Enlighten me?
I have battled to find +ve around here [Namibia Africa]. My strategy (so far) has been to look at IRR over 10-20 years which takes into account both cashflow and capital growth. Am I missing something?
Hi guys its me again.
Did the deal today.
4 brm home $32500
Rented at $160p/w
No money down.
Ah I love this game.
RussCongratulations, Russ. It’s the Qld guy who rang you a few days ago for a 1 hour chat plus follow up email!. And I was just about to ring you to see if we could cut a deal on that one![grad]
I’ll be in touch about other +CF deals we might be able to do together.
Cheers
Greg F
Originally posted by Mysta:Quote:Originally posted by RussH:Hi guys its me again.
Did the deal today.
4 brm home $32500
Rented at $160p/w
No money down.
Ah I love this game.
Russ[biggrin][biggrin][biggrin]Excuse my ignorance here; but according to the figures some of you are throwing around; this venture would not be seen as +CF. Each time I read a post it had people buying properties for say 80,000 and with rentals of 160 p/w (so how come this is different???????????)
Please explain….
BTW even by my calculations, it is good, but not fantastic!!!!!
Jo
Monopoly.A game about real estate and money.
+CF a game about real estate and money.
Lets see now.Whats the big deal about buying a house for thirty two thousand bucks or there abouts.
The big deal is that I get about a hundred bucks a week for doing stuff all.
I put no money in to the deal my life goes on the same today as yesterday only now I get an extra 5200 a year for doing diddley squat.The house is in good nick, shouldnt require too much maintenance the tenant is a young school teacher no kids.The place is immaculate.The rent is payed monthly by the government into my account so no PM fees.The extra money it makes gives me more deposit for next IP over time.
No big deal at all.
You can keep feeding your -ve IP,s all you like and hope for a big fat gain at the end of the decade but i,m quite happy to take my $100 p/w and put it to good use.
No big deal.Er Excuse me RussH,
I have no problem with your venture; how you conduct yourself or the means you use to get to your end.
HOWEVER…..I was wanting you to explain to me, if you are so interested in cash flow from cheaper properties (which is cool) I can understand what you claim as a bargain if you said you purchases a property for say 24,000 or whatever.
BUT….you said you purchased a property for 325,000 which will yield a 160p/w rent….even by my standards, that is TERRIBLE !!!! For that kind of money, I’d be looking at no less than 300 p/w rent.
Please explain…
Jo
BTW….I work part time (not out of necessity, but by choice, and most of the time I too, can enjoy time to do “diddly squat” LOL
Hmmm, I’m not knocking you russ but your after tax deal realises about 2 cartons of beer a week. You will need a hell of a lot of those to retire with a lifestyle to achieve all those things you have worked hard for. You will need another degree of magnitude to make you truly wealthy. On the other hand just two of my -ve geared props that McKnight says are so bad have gained me over $1M in equity over the last 2.5 yrs.
Hmmm I think they were worth the holding costs.Originally posted by spongefingers:On the other hand just two of my -ve geared props that McKnight says are so bad have gained me over $1M in equity over the last 2.5 yrs.
Hmmm I think they were worth the holding costs.It’s no use spongefingers, McKnight’s followers won’t be converted, and that’s okay, each to his/her own.
Keep up the good work, hang in there….and smile (it keeps em’ guessing) LOL
Jo
Originally posted by Monopoly:BUT….you said you purchased a property for 325,000 which will yield a 160p/w rent….even by my standards, that is TERRIBLE !!!! For that kind of money, I’d be looking at no less than 300 p/w rent.
Please explain…
Er, you added one to many 0 there Monopoly. He said he bought it for $32,500. Not $325,000.
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