as41Participant@as41Join Date: 2005Post Count: 108
Just out of interest. We are always hearing of people with either CF-ve or +ve. YOu could for example have a property that with 20% deposit would be positive but with 5% deposit would be negative… So I find it hard to know when people say positive of negative….I personally only plan for have 10% deposit as a buffer. That may mean that my properties may not neccessarily fall int o postive cash flow unless I had 20% deposit….What do most people work on? [inlove]
SnowflakealottiParticipant@alottiJoin Date: 2006Post Count: 64
A large deposit is an easy way to ensure positive cashflow, but it’s not the best way. Some people will tell you that it defeats the purpose of finding a good deal. Try looking for properties that will be positive on only 10% deposit, this may not be easy but keep looking. I wouldn’t tie up 20% in one property unless I absolutely had to.
LenawestanMember@westanJoin Date: 2002Post Count: 1,950
A large deposit defeats the purpose of the investment as you are trying to get as much back from what you invest.
The real deals are ones which you use low deposit(5-10%) and get +ve. If you have to put in 20% to get positive then you will tie all of your capital up for one positive.westanMember@westanJoin Date: 2002Post Count: 1,950Gerry GMember@gerry-gJoin Date: 2005Post Count: 21
I Agree with alotti 100% in what she says.
The CF +ve aspect should be worked on based on a 10% and if it looks good try to reduce the cash down to only 5% coz you have a good deal. Never any less – even if you borrow 100%, make sure you have the 5% cash equivilant in reserve to allow for any downturns.
Gerry GLuke TaylorParticipant@world-changerJoin Date: 2005Post Count: 415
Hey guys ,
I take CF+ to mean: A property that returns more cash than what it costs each month.
This including the deposit interest at market rate,(even if you own the deposit outright and didnt borrow it.,as you would be getting a return on it if it was sitting in the bank),no matter how big a deposit you put
:also including all expenses,rates,repairs etc.
Very hard to find these type deals today? Yes, but not impossible.
With a 5% deposit. I have read Steve’s book and have become very attached to wraps and lease-options, but wraps in particular.
If you wrap a property and you get a deposit from your tenant then that can help your deposit, and they pay more interest than you pay as you cahrge a premium. So why can’t it be CF+?
Or is everyon talking about buy-hold, where you own 5% and charge normal rent?dare_to_dreamMember@dare_to_dreamJoin Date: 2006Post Count: 88
I don’t know about wrap deals…. Yes, you are making money each month. But at the end of the day, you are making the property available to buy by the tenant. Doesn’t this kind of defeat the purpose of being CF+ if you have to sell the property in 3yrs time anyway if the tenant wants???? What makes a WRAP deal so good????
No, the tenant can’t buy the property in 3 years time. That would come under the lease-option thing, where they have an option. And by the way you would increase the price so that if they did buy you out(somehow?) then you would stand to make a profit and still be CF+.
Having a property that is not CF+ defeats the purpose for investing. I don’t know exactly but im guessing that you want to invest so you dont have to work aqnd can be financially independent. Well Its CF+. For 3 years, still its CF+ for those 3 years better than 10 or so years of CF-(even though you would get more capital appreciation, you would not have acheived the objective).
CF- defeats the purpose of investing(if thats financial independence).