Hi all,
Just a quick question. I was wondering what others allow for annual cash expenses. Do you break it down, or do you have like a standard % that you use. I’ts broken down here. I’m just not sure on a few of these points and what amount to allow for.(+) Rental management fees (7% of rent aprox)
(+) Letting and advertising fees (??)
(+) Body Corporate fees
(+) Coucil rates and fees (Check council)
(+) Utility rates and fees (??)
(+) Insurance (??)
(+) Misc. Management costs (??)
(+) Land tax (Varies by state)
(+) Annual Maintenance Allowance (5% of rent)
(+) Other Ownership Costs (??)Thanks for any comments.
hi markymark
as a very rough estimate i do about $40 pw for all expenses (not including interest), but this is just a guess because if it is a unit the you have body corporate fees which can blow out the figures. i’d prefer to look at each individual deal and see the figures. Sometimes rates can be a lot higher than expected, i’ve found this in some areas of Tassy and NZ.
regards westan
I find +ve cashflow deals in New Zealand which I sell to other investors. To be on my database send an e-mail to [email protected]
Hi MarkyMark,
Very much agree with Westan, just having to know what the weekly bank repayment will be (either being P/I or I/O) and adding $40 a week, will give you a quick estimation of the running and keeping cost for that particular property.
Cheers,
sisThanks guys. I found this deal; it did not quite make the 11 sec test. So I Jiggled the numbers around a little but it is still not really there (numbers that is). It’s a bumber as the house is in a good location, somewhere I have been looking to invest.
I had Annual Cash expenses at $53.00 per week, a little to high. I also did the sums on P&I @ 8% (safety buffer) at an expected 80%LVR. The current rent seems slightly low but only marginally.
I must admit I am tempted to do the deal anyway. But if I did that I would be investing on expected cap growth and breaking my rules for this type of deal.
I suppose I should walk away. [
]MarkyMark
Remember that the deal DOES NOT have to meet the 11 Sec Sol to actually be cash positive.
If the numbers stack up, go for it. Don’t be too hung up on what is used mainly as a filter to get rid of obviously ‘not good for you’ deals.
Cheers
MelYou seem disappointed when you think about not going through with this deal. I agree with Melbear.
You like the location and it’s what you want, to me it also seems such a shame to pass this one.Don’t forget that the rents will go up in time, so is it possible that this deal will become cf+ after a reasonable time?
Let us know what you decide![]$40/week for expenses I think you are living in the land of SIS with $30 for 3 weeks food. Do the sums dont just guess.
One of our properties
Rent 265/week * 7.5%/52 = $19.9
Rates $1800/y /52=34.6
Oh am I over $40/week yet and I havent even added in insurance or land tax let alone maintenance.
Sure these are all tax deductable but you should atleast have a good estimate of these things before you buy, ring the council find out rates dont just guess.
ErikaHi Guys,
lol, its not $30 for 3 weeks food… its more like $50 for 3 weeks, but i dont cook at home… i eat at work
but… for Rates at $1800/y /52=34.6, that is pretty high rates, but $40 a week in expenses is about average.
Cheers,
sisIn brisbane rate include water so you find that they are this high.
Hi Guys,
Thanks. The thing is this,
– I have found a good area that I like the economics of
– If I look hard I can find deals that are CV+ only when geared at 80% LVR (which is where I want my portfolio to sit if possible anyway). So as you can imagine they are not winning any awards with regards to Cash on Cash return (i.e. The opportunity cost is that I can get a marginally better return in a completely safe investment).– Historically the capital gain for this area is not too impressive either (but it has always gone up), the past 12 months cap growth has been very good (but I’m not really counting the past 12 months as that is an anomaly rather than the rule). And this is not a capital gain strategy that I am employing.
– So my dilemma is this. If I am not getting a good cash return AND I cannot rely on Cap gains then why buy?
My only temptation is that, there MIGHT be good cap growth, rent MIGHT go up in the future.I think I should take the position of,
– If I cant find one that is cash pos at a minimum of 8 – 10% minimum C on C return then forget it.Play hardball with myself [
!]. What do you guys think?Weigh up the pro’s and con’s i guess……. if you do go ahead, how will it affect you financially, if you don’t ?
NO RISK – NO REWARD, but lessen the risk i guess by investing in suitable areas..
And what returnwould you get from putting it in the bank or another investment vehicle ???
REDWING[
]“The man that thinks at 5o as he did when he was 20 has wasted 30 years of his life”
]
]
!]. What do you guys think?
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