I have a question that relates to the basics of cashflow positive property. The arguments against cashflow positive is that to gain a high rental return, the property must be cheaper to buy, and therefore older. Is this the case?
I understand the arguments presented in Steve’s books about solving problems to create positive cashflow solutions. However, is this possible with newer property, which has depreciation benefits and lesser maintenance requirements? This is an argument against positive cashflow- it’s no good buying something that gives this positive cashflow if you have to pay the benefits out on maintenance.
Does your experience reinforce this or counter this argument? Feel free to let me know, as I understand arguments for and against, and I beleive that its only the empirics that can sway me either way.
Nathan Thompson
Hi Nathan
It does not necessarily follow that cashflow positive must be older cheaper homes in country areas. It can be done with newer homes in major cities (with growth potenital).
one way to solve a ‘problem’ would be to convert a room into a bedroom. With the right house this could be done on an old or a new property. Adding a room could mean another 30% in rent which could turn a -ve property into +ve.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Nathan,
I am a novice here, but if you don’t mind opinions from me, I believe the issue is not whether the property is new or old, it is the ‘solution’ that you provide that make it happens. So we all need to think hard to come up feasible solution:)
Also I believe that positive cashflow only after taking advantage of depreciation is not truely positive cashflow.
Just my novice opinions.
From FUN
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