G’day all,
My names Damien, I 17 and live in Tasmania, I’ve yet to read “0 to 130” by Mr. Mcknight, but I hope to do so soon in the future, [thumbsupanim], I am writting this post in the hope of better understanding of Positive Cashflow Propertys, because i believe that this is the path to financial freedom, although many things are yet not clear on the path ahead, that is certain. I see acquiring positive cashflow propertys as buying a house below market value and renting it out, so that the rent is enough to pay for the mortgage and also put a little money in your pocket, although this is sounds simple, this seems rather difficult in the fact of getting a house for half the price of the actual value. I was hoping if anybody would be able to set me straight in my thinking, or head me in the right direction. Thanks alot all.[specool]Cheers,
Damien<<<<this seems rather difficult in the fact of getting a house for half the price of the actual value.>>>>>
I am not sure what makes you think you can ever buy a property for half price. You may make an offer below market value and it gets accepted, but as far as the bank is concerned that is all you can borrow. Maybe a year down the track you can have it valued again.
Just focus on the sums – rent less expenses eg. interest. At your age I was concerned about School, School, School. Focus on furthering your education or getting a job. In my view further education. Then speak to a broker or bank and find out how much if any you can borrow. Then buy a house.
At 17 I was too scared to even go to the bank to take money out over the counter.
Good Luck with it all.
<<Just focus on the sums>> Look at the online calculator for more in dept thought on the numbers assotiated with the deal. The different people involved to pay and the way the numbers add up! Positive Cashflow Calculator in the ‘Property Drop Down Menu’ under Analysis Calculator.
G’day, Thank you both for the replies, I think the main obstacle that i am trying to say is how do you obtain a positive cash flow property, even looking at the +CF caculator, it doesn’t seem as though you can create positive gearing realistically, as the (rent)-(loan repayments)-(yearly expenses)=negative gearing, property prices are just so high, i find it hard to grasp how a property can put money in your pocket! A property bought for 56,000 with the rent at 140 gives you less than 2 bucks a week, and the problem is house aren’t at 56K but are over 100K[eh]!!!
Cheers,
DamienHey man,
As with you i am also young, and just starting out. What you need to get your mind around is as Steve states in his book ‘$50 a week doesn’t sound like much but when you have 130 propertys thats $6500per/week’ and now thats heaps. If your getting an extra $2 per week it means thats $2 that you don’t have to work for. I’d like to stay in touch with you as i feel that we can help each other out. Check out my profile and add me to AIM if you have it…Balliez
The weak will feed off of the strong until they are strong enough to be fed off of…
d_dry,
Yes, you might get $2 a week… but that means you have an asset you are paying NOTHING for- the tenant is paying it off for you in its entirety. Of course, for a 56k property, it may be in such poor condition that the roof might fall off- who knows? And if interest rates rise, well, your property may become negatively geared. Also, rural properties may not do so well in an economic meltdown. If unemployment rises, leading to interest rate rises.. and your tenants up to leave to a city so they can get employment… well, triple bummer for your investment.
If you spend double the amount for a property, your investment might not be completely subjected to economic conditions. Think population, infrastructure, employment, age of building, etc etc.
Sometimes it’s about quality, not quantity. There is so much you can read- read everything you can, and come up with a range of desirabilities you’re looking for in an investement
kay henry
Originally posted by d_dry:G’day, Thank you both for the replies, I think the main obstacle that i am trying to say is how do you obtain a positive cash flow property, even looking at the +CF caculator, it doesn’t seem as though you can create positive gearing realistically, as the (rent)-(loan repayments)-(yearly expenses)=negative gearing, property prices are just so high, i find it hard to grasp how a property can put money in your pocket! A property bought for 56,000 with the rent at 140 gives you less than 2 bucks a week, and the problem is house aren’t at 56K but are over 100K[eh]!!!
Cheers,
DamienI don’t know how you work it out to get $2pw +CF for $56k renting at $140pw unless you borrow more than you need.
?
Kind regards
Jet Dollars
[Retire Young, Retire Riches] [strum]Howd, once again thanks for all the replies! Just to address some of the statements in a few of the replies, a property that pays of the mortgage as well as putting money in your pocket is great no matter how much if gives you, from $2 to maybe even $1,000, because that money that you are not working for, its money that is working for you! On another note I stumbled along to the positive cashflow calculator, which can be found just a few posts before hand, and just put some numbers in, thats how i got to the $2 per week. But the main point i’m trying to figure out is how do you find one of these properties that will put money in your pocket! because properties are just so expensive! if you start negative gearing, and claim it on tax then after thirty or so houses your not going to have much to live on! I’m just trying to say how do you get a house (with propertys being so expensive), with rent high enough to pay for the mortgage and place money in your pocket, it just doesn’t seem realistic???
Cheers,
DamienDamien, I believe the answer is that they are harder to find these days, but you might have to get a little creative..
If you have a look at some of the regular posters on here, you will see that they are still finding these properties – most have switched to NZ to look, but some are still finding the props here in OZ.
It seems that every magazine I pick up these days is talking about Aussies buying in NZ, which suggests to me that the boat may well have sailed – unless you use somebody like Westan or Minimogul who are always on the ground looking for the good deals…
Cheers
MelG’day, I was just wondering Mel if you could direct me to a good NZ real estate website?[biggrin]
Cheers
Damienhttp://www.propertytalk.co.nz
http://www.realenz.co.nz I thinkCheers
MelHi All,
I have several IPs but am on the look out for more. I have searched far and wide in Aus and have yet to be convinced that I will find something above 6 or so % return – not counting paper deductions. I belive in the CF+ approach and buy and hold and keep hearing about being creative. I am strating to feel that I am not creative. When I think of WRAPS or other stuff like that I go cold – personally I feel they take advantage of people.
I really feel now I may have to wait for another cycle when rents catch up to inflation to get more propeties.
Frustratingly yours,
MikeIf you feel frustrated Mike then take a break. Don’t think about it for a day or week or whatever.
As far as wraps go it is a matter of perspective as not everyone has the same viewpoint. Some people are incredibly grateful for the opportunity to own their own place via a wrap deal. They have no other option for home ownership and have no aspirations beyond that.
What about buying a place with a block large enough to subdivide? Keep the original house as an IP and sell the other half of the block. Nobody looses out here. Or instead of selling the other half of the block why not build and make it dual occupancy. Think of as many possibilities as you can even if they seem impractical or silly. Don’t discard any ideas, just try to work out how to change them and make them practical.
Cheers
Sonja
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