Answers to “Where to Find CF+ Deals”

A few simple tips from someone who is professionally qualified to comment;
1.Dont buy serviced apartments. They usually have onerous leases (especially around years 5-7) and often depreciate in value as the depreciation benefits diminish. They look like a residential product but they are not and are a complete nightmare for the uneducated investor. The initial return is a farce and inflated by the inclusion of a furniture package. Watch out for a massive drop upon market review of the rental.
2. Properties that promise to be positively geared generally only exist in high risk areas ie. mining towns or areas formerly underpinned by tourism such as FNQ. If you are lucky enough to maintain good occupancy then yes they can be an investment that is positively geared but you run the risk of no tenant at all and then say goodbye to positive gearing, hence the high yields….and high risk.
3. The best way to achieve positive gearing is buying a lower value property in a high rental demand area and then spend a few bob creating extra bedrooms. In lower value properties rental levels are primarily related to number of bedrooms, increase the number of bedrooms and you can dramatically increase your rental. If done right you can also add huge money to a properties overall value. I have done this many times and made fantastic money along the way. The hard part is finding the right property that you can add an extra bedroom cheaply (under $5,000) without ruining the properties floor plan. Formal dining areas in older properties just beg for a conversion to a bedroom.
4. Positive gearing is great if you can achieve it but it is more often an elusive dream. Dont rely on the fact that you can achieve it and have a good plan B.

Hi adambc and fellow property enthusiasts,

have you ever considered a investment strategy called owner finance?
It enables you to turn almost any property into positive cashflow…
Cheers

Hi, I am looking at the new 1×1 apartments up in South Hedland that are on the market for $599,000. They are advertised as being able to rent for $1300 a month which is a yield of 11.1%

I am obviously a little cautious and want to know why these deals aren't being snapped up by investors when it sounds like an easy way to get a CF+ property.

Any insight or opinions would be appreciated.

Regards

Yeah per week, sorry.

i hope you are right i was looking in tassy for affordable properties to buy

When this post was first started it was advised to look for properties around the $100K up, that was in 2006…

Who might like to update please to what they expect we should be able to look for as a reasonable buying price equivalent in 2012/2013?

Thank you

 Hi Shedin, my first suggestion would be to pickup the latest copy of Australian Property Investor Magazine from your newsagent.  They have listed a number of areas in the latest issue, where property is still available for around the +/- 200k mark which with due diligence could result in great deals.

The problem with looking for cash flow positive properties is that they can often be in mining towns or other high risk areas. A few years ago I got into what looked like a great deal in WA and ended up getting burned because the market dropped. For my next property I used Folio Invest who found me a property purely on fundamentals and it's gone up around 15% in the last 18 months. Just make sure you're not buying in an area that is supported by 1 single industry, like a mining town. The miners are losing profits left right and centre, so make sure you're buying a solid asset. Don't risk an asset depreciating for a bit of cash flow.

hey cazza69 i was just wondering if you could send me a copy of that link, cheers ben

i think Bradley might be renting out the rooms separately eg 6 rooms x $110-120 /wk/room