Positive Cash Flow Properties – Real world examples

Sorry Engelo, can we please use this thread for examples of Australian positive cash flow properties that are currently for sale only? There are numerous other threads on US properties.

There have been a lot of positive cash flow US properties for a few years now. I also agree that for established Australian Investors they could add value to their portfolio.

I personally don’t know much about the US property market and economy. At least not enough to make a confident prediction of the market and therefore to commit in investing my money. I also never invest in a market that is generating a lot of buzz. But that is just my personal preference.

http://www.realestate.com.au/property-house-qld-miles-116356347

Note: close to mining area.

None of the other members want to contribute to the list?

http://www.realestate.com.au/property-house-qld-east+innisfail-116014499

Vacancy: 1.7%

Spend $5,000 and rent it fully furnished for at least $300.

• This reply was modified 9 years, 11 months ago by  superAndrew.

http://www.realestate.com.au/property-house-qld-dirranbandi-116828331

Price: $85,000.00
Rent: $150 per week

I saw a post on this forum not so long ago which was posted in 2006 that is talking about +ve cash flow properties in the US.
https://www.propertyinvesting.com/topic/4385123-usa-positive-cashflow-properties/

This is 2 years before the financial crisis. So the US has been full of +ve cash flow properties for over 8 years now… where are all these +ve cash flow properties coming from?

I am not trying to be negative and I believe that there are +ve cash flow properties in the US but here are some of the reasons that deter me from US property.

People are reporting 30% gross yields in the US. I wonder why the tenants don’t borrow (even at 10% interest) and buy these properties instead of renting. An example I saw was a property that cost $50,000 and was being rented out for $300 per week. Borrowing at 10% would cost the tenant less than $100 per week in interest. 1/3 of the rent. Seems weird to me why they would pay these high rents and not purchase the properties.

One reason could be that banks won’t lend to them because they don’t meet their lending criteria. That would be a worry to me. How can they afford $300 rent per week when the bank thinks they can’t afford $100 interest.

Maybe the US banks don’t lend for these properties because of whatever reason they might have. So as an Aussie you will need to borrow locally by using cash or equity (I doubt that Aussie banks will lend to buy US properties).

So essentially you are helping pay off US debt or transferring it to Australia.

Also why would someone sell an investment that pays 30% yield?

Bennytee wrote:

Agreed, on another note (not trying to be negative) I don’t think I would want to tie up 42K in most of the properties that have been listed, not sure you would get it back easily.

Actually I would prefer to tie up my money in Australian properties than in US properties that US investors don’t want themselves.

Bennytee wrote:

Dirranbandi has population of 437 people, although it positive cash-flow, in my experience the rent and value will most likely be the same 5 years from now.

That’s 9.2% yield for 5 years. Doesn’t sound too bad to me even though these properties are supposed to be examples only and not investment advice.

Just out of curiosity. How much capital and rent growth has there been in the US in the last 5 years?

There is a reason why banks don’t lend or only lend at a low LVR. Banks are very good at assessing risk. At least they should be since that is their job. When a bank lends you money it needs to make sure to get it back from you and earn interest on top of it.

Australian banks will lend in general 80% because should you not be able to make the payments anymore they will put the property on the market and should get at least 80% below the market value (the amount they lend to you) back from the sale. So they believe that Australian property is quite safe. This also explains why they lend 50% or less for share investment.

So the fact that US banks don’t lend on their own properties or lend at lower LVR should be an alarming factor and reflects the risk of US properties.

Bennytee wrote:

I only use cash at this point in time, however I believe it is extremely difficult to get mainstream finance on resi property as a foreigner

The fact that you are a foreigner in the US doesn’t have much to do with the difficulty of getting finance. Like I said the US needs other countries to pay off their debt and they need foreign cash to do that. However I have heard from people that they do lend but I think it depends in the area you are investing in and only less than 70%.

In Australia Chinese foreigners can borrow 80% and more with insurance. All they have to do is proof they have regular income.

Bennytee wrote:

The same reason people in Australia sell property.. to realise a gain, retire, death, divorce, perhaps its their investment strategy.

There must be a lot of gain realists, retirees, deaths, divorces, etc in the US and only in certain areas.

What is your net yield?

I am not saying that investing is US property is good but it’s not as good as everyone tries to make it to be.