Positive cashflow properties

hi andrea – if you have a look at the australian property investor there is a list of rental yields in the different states. There are places in qld and sa with rental yields in the 8’s and 9’s. We started a thread in another spot to see if any forum members are investing in these locations.

If the average (was it average or median) yield is 8 you would image that there are individual properties achieving well into the 10’s and possibly higher. So in answeer to your question I would have to say – probably yes.

You would hope that in areas that are even 7% yields there would be forum members out there getting 10% plus yields.

http://www.cashflowproperties.co.nz

Straight pos cashflow properties are about as common as an honest politician these days.

However, you can buy a ‘standard’ purchase property that is pos cashflow after tax if you look hard enough.

But you need a few important factors for it to happen –
1. A high tax bracket income helps, but is not essential.
2. The rent return would have to be at least 1% higher than the current interest rates (2% would be better).
3. The building has to be built after 1987 to be eligible for the ‘special building write-off’, as well as other depreciative items in the property.
4. On that note, you need to also get a quantity surveyor to prepare a ‘depreciation schedule’ for your accountant to use in the tax return preparation.
5. Putting down a larger cash deposit will also get you over the line.
6. Look for ways to increase the rent by adding value, such as repainting, new carpets, built in robes etc.
7. Finally, keep trying to pay down the debt. I know that a lot of people advocate not paying down deductable loans, and I think you should clear any personal debt before starting on the Investment debt, but the less debt you have, the more likely you are to be making a profit.

The trick with an ‘after tax’ profit is you start with an ‘on paper loss’, but end up with a profit after tax that is not taxable. Now that’s nice.

A combination of all the above factors would still get you there in many areas.

If you read all the Margaret Lomas books she explains very clearly how to go about it.

At the end of the day, even a neg geared property is better than doing nothing, as it is a forced saving, but only buy for neg gearing in a high cap growth area to offset the neg cashflow.

Cheers,
Marc.
[email protected]

“we get sent lemons; it’s up to us to make lemonade”

I think it will be worth keeping an eye on the market as we are seeing rental yields increasing across the country. However I would strongly advise against buying in small country towns the likelyhood is that prices may go down. More people are also moving out of country areas.

I thought it was easy to buy here I would not have established myself in the United States.

Nigel Kibel

http://www.propertyknowhow.com.au
check out my new web site

Australian and New Zealand The United States Property Researcher and education