Hi all,
I got the new issue of "Smart Property Investment" and have come across something perplexing. In the NSW state report on page 12 there is a list of the fast 5 houses and coming in at third was a place called Cudal. Not knowing anything about this place I checked it out. Mmmmm well nothing seems to make sense. Its a SMALL rural town with no major infrastructure works planned, no major industries, there's like only a half dozen places for sale and nothing for rent. Anyone got any clues why this place is doing so well?
Dave
I’ve stopped reading these magazines years ago. They just blow a lot of smoke with feel good stories about how investors borrow up to 95%, in debt up to their head and how successful they are.
Yeah i am gettin tired of them too. Do you read books then?
Daveybear wrote:Yeah i am gettin tired of them too. Do you read books then?No I wait for the movie.
I just read off the forum. Half the magazine is advertising. The stats at the back are handy but even those need to be carefully scrutinised.
Scott No Mates wrote:Daveybear wrote:Yeah i am gettin tired of them too. Do you read books then?No I wait for the movie.
lol – sounds riveting. An investment property epic – "in search of the elusive property hot spot."
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
I also stopped buying these magazines.
All the figures in the feel good stories are manipulated.
After a while, instead of feeling motivated, I felt deceived. Haha
I would never use a magazine or tv promotion to find a "property hotspot" they normally only promote it after its boomed or as its happening. Unfortunately you've got to do your own homework
they are good for stats though Tony Fleming | Triumphant Property Group
http://www.triumphantpropertygroup.com.au
Email MeNSW Buyer's Agent specialising in Western Sydney-Blue Mountains-Orange-Albury
I was also disgusted when I was at the newsagent last and saw the YIP mag with the front cover titled "Brace for the Boom", when I am in fact 99% certain that we are sailing into a global economic storm of unprecedented proportions.
It is a matter of when, not if, this debt-based house of cards that we call the global monetary system comes crashing down.
I am by no means pessimist, and I'm sorry if this is breaking news to anyone here, but I think it's time we, as investors, woke up and had a good look at what's happening outside of our backyard and prepared ourselves accordingly.
Looking on the bright side, I believe there is great opportunity for those not asleep at the helm as we sail into this economic storm that will probably be the greatest wealth transfer in human history.
Hi,
I apologies for adding something that may be irrelevant to this feed, however I'm unsure as to where to post my question….
Hopfully someone can help me out…
I am very new to property investing, Steve has totally changed my thinking and what I've been taught (negative hearing) in the past.
I am 26 years old, and still very fresh and new to all of this and still trying to wrap my head around investing terminology. Can someone please explain to me what is the best way to calculate a positive geared investment? I understand that there are a number of variables that come in to play, however I'd like to know if there is a quick formula I can follow if and when I find a good deal. My understanding is that you cant really tell too much from the rental yield percentage as that does not give you a clear idea of what the exact cash return is (including paying interest)
Hope to hear from someone soon.
Cheers!
Way too many variables and if you are new to the game then work it out in full till you get more experienced. Depends on all your outgoings versus incomings . Dave
jarydneethling wrote:I understand that there are a number of variables that come in to play, however I'd like to know if there is a quick formula I can follow if and when I find a good deal. My understanding is that you cant really tell too much from the rental yield percentage as that does not give you a clear idea of what the exact cash return is (including paying interest)Hope to hear from someone soon.
Cheers!
- the most basic rule: Cash out vs cash in (if cash out exceeds cash in, then you are negatively geared, depreciation excepted), don't take into account tax scenarios
- consider net cashflows (not gross figures, as you should compare apples with apples).
- remember to keep capital items separate from cashflow
You will need to get a feel for returns on properties by doing countless analysis for each investment opportunity. When you can see patterns, then you might consider shortcuts.
It's true that yields can be deceptive. For example a unit may have higher yields but then you have BC to add.
Some people add the interest on the amount you borrowed but if that is the case you could just borrow less and every property is positively geared.
I assume (even if I haven't) that I have borrowed 105% (inluding purchase costs, stamp duty etc).
So add interest on that + all other costs (rates, management fees etc). That's your outgoing.
Rent = your incoming. Then you know if it's TRUELY CF+
You can add in depreciation too which can make it + geared (even though not CF+).
Thanks heaps for the advice!
Hopefully I'll sink my first deal soon. Positive cash flow deals are really hard to find!
Hi jary
Firstly welcome to the forum and i hope you enjoy your time with us.
A couple of the previous posts have set out the description of a positive cash flow property.
Remember there are many ways to compensate for a property that on the surface appears negatively geared.
When we work with clients we look to balance higher yielding properties with those the enjoy opportunity for capital growth.
We look to mix vendor finance and use the surplus monthly return to starting paying down either non deductible home loan debt or create an income from the investment itself.
As long as you have income on paper to initially support the level of borrowing and equity or cash to be able to cover the initial deposit and acquisition costs then there is no reason why you can't start too build a decent portfolio.
Good luck and cry out if you need anything.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Jary,
Welcome, you've done the hardest part and that's ask the question…
a VERY ROUGH way to work out cash flow is using the 1% rule.
there are few threads on it in the forum.
Take it with big gain of salt, as there are buying costs, holding cost, deprecation, maintenance, interest rate changes etc.. etc.. to factor in
if the figure is neutral or only slightly positive, it's most likely you will make a loss in the first year. (if not first few years)
Due diligence should be applied before you commit further to any acquisition.
Run it past your accountant if you think it's worth pursuing, and ask them what are the pros / cons, and pitfalls of this purchase (you can always put this as a clause in your offer)
Regards
Ritchie
they are good for stats though 
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