All Topics / Help Needed! / Answers to “Where to Find CF+ Deals”

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  • Profile photo of ChristopherLeeChristopherLee
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    @christopherlee
    Join Date: 2011
    Post Count: 5
    angelinsydney wrote:
    Hi Quickchick,

    You have a brilliant brain for math. That kind of analytical thinking is what you need.

    Hi Matt,

    Interesting question. If I bought it for $970K, I would have needed to use my own funds. The 20% deposit alone would be a whooping $194K. The increased stamp duty is almost a non-event anyway because I used largely the “buyers” money. In this manner, I only has to come up with $22,000.

    At the same time, what money I saved I bought a duplex in Millicent, SA for $185,000 returning $250 per week.

    Instead of lumping all my available funds in one property, I ended up with a prime property in the Northern Beaches and a duplex, too.

    Sometimes the only way to move forward to create a win-win situation for all.

    I hope this has enlightened you. Thank you.

    Angel

    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

    Profile photo of ksherwellksherwell
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    @ksherwell
    Join Date: 2007
    Post Count: 125

    Hi Angel,

    I'm interested to know as well.

    Profile photo of n_green983n_green983
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    @n_green983
    Join Date: 2006
    Post Count: 10

    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.

    Profile photo of proptymanproptyman
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    @proptyman
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    ah yes, that's good to hear….

    regards,

    Profile photo of shoooshooshoooshoo
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    @shoooshoo
    Join Date: 2011
    Post Count: 90

    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.

    Profile photo of Kiwi Property GuyKiwi Property Guy
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    shoooshoo wrote:
    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.

    Hi there shoooshoo,

    The highest positive cashflow properties can be found in the most southern states of Australia, New Zealand ;-)

    Seriously now, we are once again seeing many Aussies buying up our CF+ properties here. After our price corrections over the last 2-3 years yields are back to where they were pre-boom in some areas, and there are certainly some great deals to be had at the moment. The market certainly appears to have turned a corner as well, with far more buyer interest now, and prices slowly starting to edge upward again.

    Sorry, i can’t help you with actual Aussie areas. ;-)

    Profile photo of shoooshooshoooshoo
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    @shoooshoo
    Join Date: 2011
    Post Count: 90

    “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.

    Profile photo of Tassie developTassie develop
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    @tassie-develop
    Join Date: 2011
    Post Count: 2

    Hi All,

    You can still get CP+ in parts of Tassie. I had 11 a few years back on our west coast (Queenstown and Zeehan) but only 1 now. There's mining and a little tourism there and i did quite well when the mining boom first took off. If you make offers and look hard enough you'll find around 10% return that you'll need to get CP+ there. Entry under 100K. The problem is the towns are small, remote and not likely to grow any time soon. So while you might make $10 or $20 a week you are unlikely to get growth. Best opportunity i mssed was buying a Motel and strata titling; do that in the right place and you could make some good $$ and cash flow. TD

    Profile photo of Kiwi Property GuyKiwi Property Guy
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    @kiwi-property-guy
    Join Date: 2009
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    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.

    Profile photo of Tommy1Tommy1
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    @tommy1
    Join Date: 2010
    Post Count: 12

    Pretax cashflow $2,020p.a. (at 100% finance)
    Pretax cashflow $3,415p.a. (at 100% finance)

    Can you please advise on how you calculated the pretax cashflow.
    Thanks

    Profile photo of Kiwi Property GuyKiwi Property Guy
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    @kiwi-property-guy
    Join Date: 2009
    Post Count: 82
    Tommy1 wrote:
    Pretax cashflow $2,020p.a. (at 100% finance)
    Pretax cashflow $3,415p.a. (at 100% finance)

    Can you please advise on how you calculated the pretax cashflow.
    Thanks

    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.

    Profile photo of BennyteeBennytee
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    @ten_burner
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    Hi Guys,

    its not hard finding the deals in NZ its getting decent finance, I approached a couple of lenders in NZ 2 months ago (Im an Australian citizen) and the best LVR I could get was 70% and on top of that I need X amount of cash in a bank acct there as a security

    has anyone heard different ??

    and on another note Ive been finding plenty of cash pos stuff in the outter suburbs of Hobart, there nothing flash but i havent had any dramas with the ones Im holding and the numbers do stack up…
     I wouldnt be buying for growth anytime soon down here

    Profile photo of matthew.fmatthew.f
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    leewizza wrote:
    It’s about time someone said it. Well done!
    I too believe it is impossible to find these CF +ve properties.
    Not one so called mentor or even guru investor seems to be able to tell us newbies how to do it without maing no sense.
    All I want is for someone to write a book or hold a seminar which isn’t about purely motivational talk and 1980’s investing strategies. CF +ve is something only achieved with 50% (exaggerated) deposit or with millions to invest on a development.
    If these gurus were so good at it and had sooooo much wealth, why the hell are they charging drug money to listen to them hype you up?
    And why are they even doing it? They surely couldnt be short of cash…

    If anyone can answer the common forum topic of how do I start without beating around the bush I would be happy to hear it.
    I’m super keen to learn all about the world of investing and have done nothing but read books, listen to successful people and browse these forums for months and months on end.
    I haven’t found a positive CF property and I’ve been looking for a good solid 6 months.
    Sorry to sound so negative but like the last post, I am just frustrated that all I want to do is learn and noone is willing to give the answers. Not even if you pay for their books!
    If someone can prove us wrong then please do, we’d love to share the facts not the theoretical preachings pulled out of outdated books.

    Thx,

    Lee

    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.

    Profile photo of christianbchristianb
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    @christianb
    Join Date: 2009
    Post Count: 386

    Wow, lots of great stuff….long thread.
    Here's perhaps a slightly different angle as an acquaintance put it:

    Build equity and cash flow into your investments by developing them yourself.
    That is to say, develop property as an investor.

    Start from the end point and work backwards.
    If the margin on a development is say 30% (as is common) then this can also be seen as a 30% discount to retail.
    If you are buying at a 30% discount the likelihood of positive cash flow increases.

    Profile photo of gfreergfreer
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    @gfreer
    Join Date: 2011
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    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.

    Profile photo of Jeff JohnsonJeff Johnson
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    Profile photo of EPI_DenEPI_Den
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    @epi_den
    Join Date: 2010
    Post Count: 71

    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

    Profile photo of EPI_DenEPI_Den
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    @epi_den
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    Post Count: 71
    Tommy1 wrote:
    Pretax cashflow $2,020p.a. (at 100% finance)
    Pretax cashflow $3,415p.a. (at 100% finance)

    Can you please advise on how you calculated the pretax cashflow.
    Thanks

    Hey Tommy,
    We have a Cash-flow calculator on our website (it’s free). Feel free to take a look and play around with some numbers. If you need a hand, message me.
    Cheers,
    Den

    Profile photo of Kiwi Property GuyKiwi Property Guy
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    ten_burner wrote:
    Hi Guys,

    its not hard finding the deals in NZ its getting decent finance, I approached a couple of lenders in NZ 2 months ago (Im an Australian citizen) and the best LVR I could get was 70% and on top of that I need X amount of cash in a bank acct there as a security

    has anyone heard different ??

    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.

    Profile photo of Don NicolussiDon Nicolussi
    Participant
    @don
    Join Date: 2005
    Post Count: 1,086

    In the current market ( and really just to throw in a short commentary and not get to involved) when seeking cashflow it is critical to ask:

    1) Is the property CF+ (cashflow positive) because prices are falling in real terms. Are asset values falling adjusted for inflation?

    or

    2) Is the property CF + because you have a situation where adjusted asset values are stable or rising and real income is rising. IE, properties are going up and holding their value and rents have risen due to supply shortage. ( This is to over simplify rental price pressure of course)

    However, just MHO but unless you have capital growth potential you should not consider at it.

    Applies for NZ or Australia.

    What is the reason you think the asset will go up – find it – tick that box
    Now – where are properties that pay for themeselves.

    Not best to do it the other way around.

    Don’t forget about small commerical as part of an entire portfolio.

    To qualify: At least for your first 5 to 10 properites in a portfolio.

    Cheers

    Don Nicolussi | Mortgage Broker - Home Loan Warehouse
    http://homeloanwarehouse.com.au
    Email Me | Phone Me

    "I think of finance as a technology, a way of getting things done." Robert Shiller

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