Hi All,
As I am only new to property investment game. I find that the information that I get seems to be patchy. I always seem to be left with holes in my thinking.
Can someone (or everyone [wink]) write down a detailed tutorial of what they do when looking for and evaluating a Positive Cash flow property? I was after fairly detailed costing calculations, and after all these added expenses how it still works out to be positive.
I would also like to see detail on what you think makes a good deal compared to what doesn’t.
I realize that all deals are different and all fees are different. And I also realize that things are different from state to state. But there has to be some sort of detailed baseline I can work from.
Any help welcome
Hi Zyleth,
Steve’s first book 0 to 130 properties has a lot of detail on finding and evaluating positive cashflow deals. If you are more interested in a depreciation type cashflow, then try Margaret Lomas’s books.
Both the books are written simply and have examples on how the different strategies work.
Good luck,
Sue [biggrin]“Be careful not to step on the flowers when you’re reaching for the stars”
Hi Sue,
I have read Steves 0 t0 130 properties. I use the advise he gives to evaluate a +cashflow property. But when I try to include the extra costs involved it seems to either not be +CF anymore or it is only by $10 etc. Maybe I am not doing the sums right or maybe I am not taking into account something vital. This is why I am asking for other ppl’s methods.
Rgds
Zyleth
Or maybe the residential tenants aren’t paying enough rent to make it fly.
$10 per week cash flow positive might not seem like a lot of money (aprox $520 per year), but when you buy multiple properties, and overtime rental income goes up while your outgoings remain static, then it generates exponentially increasing cash flow. On top of this, most property over a reasonable period of time will go up in capital value.
Compare this to negative cash flow propety, where you are constantly paying out more money (hindering your ability to purchase more property than your job income can sustain) based soley on the expectation of capital growth.
Obviously cf+ property is more sustainable.
You can also artificially increase cf on a property through creative means – usually methods that also increase the capital value. For example, will your tenant agree to a rental rise if you provide a white goods package for them? If you furnish the property? If you allow pets? If you provide a gardner to mow the lawn on a regular basis? Put in another car space? Find out what they want from a property, and see if you can provide it for a win win situation.
I personally think that value adding incentives if you have a relationship (ie a healthy relationship via a great pm) with your tennants can help to creep closer to finding a property near to +CF (others may beg to differ). Perhaps use Steve’s guide of calculating a +CF property as an indicator of how far off (or close you are) to a +CF property. Consider the management/time involvement in owning x amount of $10 a week +CF properties you accumalate? One replaced ‘hot water service’ for example could see your $10 a week +CF property disappear?
Cheers,
Gatsby.“Sometimes the hardest thing to do in life is often the best thing to do.”
What the folks here are saying is that it’s not your calculations that are at fault, but your assumptions. Are you assuming that you must pay full price? Is there another way to structure the deal? Can you increase the rent/rental attractiveness? Can you offer something else to lower the price (eg faster/slower settlement, cash offer etd?)
In today’s environment you can’t just waltz down the street and hope to stumble across too much CF+ property. YOU’VE got to MAKE it happen, and that, when implemented, is truly liberating.
Thanks for the replys everyone. There is some very good advice there.
I still didn’t get to the answers I was looking for though. I spose now that I look over this again, What I was after was a list of expenses that I need to take into account for when I am looking into the property. Do any of you have a checklist of items you use to calculate the expenses from a property?
Hi Zyleth,
Steve has a number of templates that can be used to do the sums. The templates are available on this site. In addition there is Investment Detective software that does a similar thing.
Good luck
pr
What about Investment Detective.
Would this help?
hrm
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