All Topics / Help Needed! / cashflow +ve

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  • Profile photo of downdoggydowndoggy
    Member
    @downdoggy
    Join Date: 2005
    Post Count: 4

    seeking advice regarding cashflow +ve property. am having some difficulty locating cashflow +ve property and was wondering whether it is a wise strategy to put more cash into the deal (ie more than 20% deposit) in order to make a property +ve cashflow by reducing the monthly repayments. I don’t want to be a procrastinator my whole life and at present am motivated, have excess cash, just need the right property.

    Should I go with the above strategy or hold off and keep looking for a property that is already +ve cashflow?

    your thoughts please…

    Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,190

    You should only put more cash into a deal if you haven’t got an existing home loan. If you have an existing home loan, it would be a lot better for you to place the money on the home loan.

    Putting down more cash will also slow you down, as you will run out of deposits quicker.

    Terryw
    Discover Home Loans
    Mortgage Broker
    North Sydney
    [email protected]

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    Profile photo of williwilli
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    @willi
    Join Date: 2002
    Post Count: 186

    My suggestion would be to do the numbers on a situation when putting more then 20% down based on a Cash on Cash return.
    What often occurs is that by putting more cash into the property upfront to make it +CF it results in the cash on cash return being very low. Basically you want to make sure that your investment is atleast returning a cash on cash return equal to what the bank is offering as that is risk free.

    …Beware of the dreamtakers…

    BTW – I was part of the MAP Program and am more than happy to answer and questions/comments you may have – Happy Investing…

    Profile photo of FFCommFFComm
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    @ffcomm
    Join Date: 2004
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    Checkout http://www.jaffasoft.com to find out your CoCR.

    FFComm

    Profile photo of marsdenmarsden
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    @marsden
    Join Date: 2004
    Post Count: 112

    It is very difficult to find cash flow positive in this market. In twisting the definition by adding extra deposit you really are no further ahead. Values are high and rents are low….and it will take some time to change. Add more deposit and you run the risk of having that effort eroded by increased interest rates. Even renovating is a calculated risk because your efforts may be lost to interest rate and property devaluation. This is all unlikely to change in the near future but some people claim to find +ve in Perth and NZ. Keep looking and work hard.

    Profile photo of downdoggydowndoggy
    Member
    @downdoggy
    Join Date: 2005
    Post Count: 4

    Thanks for the great advice willi. I had considered this aspect but it is better to hear from someone with experience, so thankyou!
    quote]Originally posted by willi:

    My suggestion would be to do the numbers on a situation when putting more then 20% down based on a Cash on Cash return.
    What often occurs is that by putting more cash into the property upfront to make it +CF it results in the cash on cash return being very low. Basically you want to make sure that your investment is atleast returning a cash on cash return equal to what the bank is offering as that is risk free.

    …Beware of the dreamtakers…

    BTW – I was part of the MAP Program and am more than happy to answer and questions/comments you may have – Happy Investing…
    [/quote]

    Profile photo of downdoggydowndoggy
    Member
    @downdoggy
    Join Date: 2005
    Post Count: 4

    Thanks terry. i will keep looking for a better deal!

    Originally posted by Terryw:

    You should only put more cash into a deal if you haven’t got an existing home loan. If you have an existing home loan, it would be a lot better for you to place the money on the home loan.

    Putting down more cash will also slow you down, as you will run out of deposits quicker.

    Terryw
    Discover Home Loans
    Mortgage Broker
    North Sydney
    [email protected]

Viewing 7 posts - 1 through 7 (of 7 total)

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