Answers to “Where to Find CF+ Deals”

Hi Angel,

I am a noobie investor so please excuse my lack of financing knowledge. How come you’re not required to put down any deposit with what you did? You still had to take out a $970k loan right? Excuse my noobie question, please educate me.

Thanks,
Chris

She did put down a 20% deposit, the $230,000 she will pay to the original vendors at the end of the 5 year term = 20% of $1.2m. By structuring it this way she has avoided LMI as she was only required to borrow 80% of the purchase price which was $1.2m. Am I correct Angel?

Good deal by the way, thanks for sharing. Helps inexperienced noob’s like me continue building the confidence to eventually jump into the property investment pool.

hi guys, i came to this post to get information of the latest CF+ locations in australia, can someone update me, instead of going through 20pages of the forum …many thanks.

“your investment property” magazine september issue front cover has “25 cashflow positive property locations. so i subscribed to the mag for two years. then the next issues front cover was titled “239 budget suburbs under 500k”…is this a joke, how can that be budget? i have never read the magazine before, i hope its going to be good. when i get a chance i will right the 25 cashflow positive suburbs.

I have had several emails from people off the forum asking about the type of deals we are finding here in NZ currently and passing onto our clients.

So for the benefit of others that may also be wondering, here are the numbers from two properties that we have passed onto two different Aussie based clients in the last 10 days.

Prop 1
3 bedroom brick standalone home, very good condition, 736 sqm freehold section
$132k Purchase Price
$160k Registered Valuation (this property had a valuation of $210k at the peak of the market in 2007)
17.5% discount below Value
$28k immediate equity gain
Rent $250 pw
9.85% Gross Yield
Pretax cashflow $2,020p.a. (at 100% finance)

Prop 2
Small 4 bedroom standalone home, minor cosmetic tidy up beneficial, 735 sqm freehold section
$97k Purchase price
$125k valuation
22.4% discount below valuation
$28k immediate equity gain
Rent $235 pw
12.6% Gross yield
Pretax cashflow $3,415p.a. (at 100% finance)

Both good sound properties and are in the same reasonable sized town (20,000 population) with the main State Highway 1 passing through it.

We are currently focusing on these lower priced properties, as this is what the majority of our clients are saying they want to buy, with both good discounts and pre tax positive cashflow.

Hey Tommy, sorry for the delayed reply, have been hectic.

We have our own web-based Property Analysis software, that we had created for us called ‘Property Wizard’ which we give as a free bonus to our e-Coaching students.

You simply enter in all the financial details, and it generates a quick snap shot of performance indicators, Discount % below value, immediate equity $, Gross Yield %, Net Yield %, pretax cashflow annual, monthly & weekly. First year total return $, First year total return %, cash on cash return year 1 %, number of months to recycle your deposit, these are all great ways of comparing one deal to another. The software also generates a 10 year report forecasting cash flows and equity growth over time.

However getting the pretax cashflow figures is a fairly straight forward calculation. Of Annual rental income, less all expenses to own the property (including annual interest on the mortgage) Expenses incl Council rates, insurance, allowance for repairs and maintenance etc. In these two cases there is a surplus rental income left after deducting all these ownership expenses.

Our Property Wizard analysis software also has a function to analyse ‘renovate to rent’ deals, as well as ‘renovate to sell’ deals. We had it created to be easy to use, as some of the other property analysis applications we have seen are unnecessarily complicated, and we feel they need to be easy to use, and quick to get a result.

We wanted it to be web-based so it could be easily used by clients with Mac’s or PC’s and so that clients didn’t need to have MS excel or similar software already installed onto the computer for it to operate. And also by being web-based it is easier for us to update it down the track.

I Hope I have answered your question.

Cheers.

Hi Lee,
I was entrigued to see this post. I know it is old, but interested to see how all your cf+ property searching has eventuated over the past few years.

It is still possible to find Cashflow positive properties (CF+). Regional areas mainly, which can mean greater risk especially if population is small and employment is concentrated in one or two industries.

With no real reduction in demand, and prices softening, there are more and more good buys popping up here and there. I’m starting to write a series of articles on where to have a look,beginning with an article on three areas in Melbourne where I think there are good buys right now. Feel free to go to my website and have a look (www.everydaypropertyinvesting.com).

Cheers, and happy investing

Hi TB,

From our experience with our Aussie based clients, the lending criteria does vary quite a bit from bank to bank at the moment for Australian citizens purchasing property here in NZ.

Some are only able to get 70% finance on purchase, others are getting 80%. Some banks rejected the applications on the basis that the client had no other equity/security here in NZ, which is completely bizarre, as as soon as they purchase the property they then have assets/security here, as well as a income stream here. Moral of the story, all banks have different lending criteria, that do change quite often, and are very client specific too.

We are referring our clients to a couple of really good brokers, who are very experienced with securing finance in NZ for offshore purchasers.

But all in all, finance is certainly available to Aussie citizens buying investment property here in NZ. About half of all of the property deals we pass on to clients go to Aussies at the moment.