I noticed a lot of talk about positve cach flow to negative And i am curiose as to what is best.
Below is the current ip i am chasing.
Duplex two by two bedroom extremily well maintained built 11 years ago with double carport.Built in better area of town in south coast nsw.
I hope to get it for 320,000.It currently is rented for 320 per week combined with potential to lift by 20 to 30 per week when the carport is closed in to be a garage.(very cheap to do as i have building background) Loan is about 460 interest only or about 510 with princaple(borrowing full amount).leaving a short fall on $140 on interest only.
1# is a positive CF when rent covers loan payment completely???
2#Although units return lower capital growth these duplexes are ready to be seperated so would selling them seperate later increrase capital growth to make them more appealing
3#Positive cash flow is not as important to me and my wife as after our current home loan is covered it leaves us with over $1,200 per week disposable income with no other loans. So
4# is a duplex a smart way to go our should we stick to houses.
Any other info would be great.I guess to add to point one above, is a property considered a positive cash flow property when the rent covers loan payment plus rates etc. If so where are these properties.No place i look at becomes positive until a fair deposit is used like 50%.If that is normal i guess i should try and make capital growth on a property,sell, then use the money made on that sale to buy a positive cash flow property.That sounds like a 5 year plan.
Hi yes you pretty well have it right if all your costs such as mortgage rates etc over the year are less than the income it becomes positive cash flow. There are ways to help create this by applying to have an advance tax relief. You fill out the form to have less tax paid from your wages. Further you can claim depreciation in some instances which also increases the cash flow.
To find cash flow positive properties you would need to seek regional properties in mining towns etc. The risk is if the mining industry slows down may loose some capital growth. However a lot would argue this point as a lot of expectation in China maintaining the demand
Wayne
Mortgage Adviser
Email [email protected]
http://www.alphamortgagesolutions.com.au
Refinace, Loan Consolidation, Owner Occupied or Investment Finance. Free Service we come to you!There is no right answer as thankfully property investing is not an exact science.
The situation to a certain extent is dependant on your own personal circumstances and your current assets and liabilities.
The property is 11 years old and therefore a Depreciation Schedule to incorporate the Building Write off is an important tool in Tax minimisation.
The other more important consideration is the manner in which you purchase the property. A Trust structure will give you both Asset protection as well as flexibility in income distribution without loosing the tax benefits (if set up correctly)
Ensure that your mortgage broker is well versed on Trust legislation so that a little time spent now can provide you with a complete package in Wealth creation.
There are many other options to look at but as mentioned these would be indivually taylored to suit your own position.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
Looking for life cover – We Guarantee to beat any quote you have in writing.Richard Taylor | Australia's leading private lender
Originally posted by wanelad:Hi yes you pretty well have it right if all your costs such as mortgage rates etc over the year are less than the income it becomes positive cash flow. There are ways to help create this by applying to have an advance tax relief. You fill out the form to have less tax paid from your wages. Further you can claim depreciation in some instances which also increases the cash flow.
To find cash flow positive properties you would need to seek regional properties in mining towns etc. The risk is if the mining industry slows down may loose some capital growth. However a lot would argue this point as a lot of expectation in China maintaining the demand
Wayne
Mortgage Adviser
Email [email protected]
http://www.alphamortgagesolutions.com.au
Refinace, Loan Consolidation, Owner Occupied or Investment Finance. Free Service we come to you!Well my situation is this.
Loan amount $460 per week interest only.
Rates about $35 per week For a total of $495
Now rent is $320
Tax refund of approx $190 (confirmed by accountant) Total $510
Now that leaves me about $15 bucks in front so i guess the loan looks after itself and since im after capital gain by either a sale down the road or seperate the units and sell, it seems like a ok buy.There is no financial load on me and a hopeful capital gain down the road.Hi Devo76,
Don’t forget monthly management fees (somewhere between 5% and 10% depending on the agency), water rates (the tenant only pays the usage) and ongoing maintenance and repairs!I know, it’s a lot to think about!
LindaYes it is. My mother is a retired real estate agent and she is happy to manage the property for nothing. And as far as repairs go they are extremely well maintained and before i was a mechanic i was a carpenter so i have repairs covered.So now i am struggling to find things to tell me not to do it. I tend to over analyze everthing by nature but i think this still looks like a good idea.
I would go for it. Don’t forget landlords and house and contents insurance. If you want to be ultra careful there is also an insurance for trades people caring out repairs on property in case of injury. Applies to WA but not sure about other states.
Hi, i have found a commercial/residential premises in regional NSW for 70-80 thousand with a current lease of 200p/w and rates of 960 per annum. When you run the numbers is a CoCR of approx 12% and a ROI of approx 4%. Im only a student and as such have a lot of time and no money. If anyone is interested in this property i would gladly hand over the details in return for a fair spotters fee should you purchase the property. If you have any questions please dont hestitate to ask.mailto: [email protected]
You must be logged in to reply to this topic. If you don't have an account, you can register here.
