Hi All,
Please treat me gently cause this is my first time!!! [blush2]
I think I have found my first buy and hold +CF property. Thanks to Jaffasoft’s great calculator the numbers work out as follows:
Summary:
Total annual rent = $5499.00
Total annual mortgage = $2831.76
Total annual costs = $2109.88
Total annual cashflow = $557.36
Total funded costs = $14260.00
Risk free return = $570.40 Bank interest rate of 4 Percent.
Annual Cash On Cash Return = 3.91 Percent
Cashflow Positive Weekly = $10.72The house is in a small (+3000) regional centre that has shown positive population growth. There is a great deal of infrastructure with 2 banks, schools (including highschool), and the regional council office etc, with many new business opening in town ove the last 18 months.
I have spoken to both of the local real estate agents and they suggest that rental property is in demand with no vacancies at the moment. Apparently what ever they can get they can rent out.
I think I am onto a winner, but would like comment from those who have “been there and done that” to reassure me that I am on the right track!!!
[ponder]angel how dare you write such a stupid post first up!!
just kidding!! you sound like an expert and the numbers look ok.
btw whats the
– purhcase price
– deposit amount
– debt level
??Is $10 per week enough if interest rates go up? [cool2]
(I’m only new too, so don’t take my word for it…)
Regards,
Christian“Just because you’re winning doesn’t mean you’re the lucky one.”
Thanks aussierogue…
Purchase price is $45K & deposit is 20% & rental is $110/wk. I can afford more deposit (this is about 15K with expenses) but if I keep it at this it leaves me enough for a deposit on another property.
I am yet to source finance, so I am just presuming that a 20% deposit will be suitable….Is that P&I or I.O.?
It dosen’t really matter, but if it’s P&I you can switch to I.O. to boost your CF.
Goood deal! Who says the 11sec rule dosen’t work anymore!
Rgds.
Lucifer_auAnother quick thought on this… My strategy (?) is to buy a couple of these cheapie type properties with the cash deposit that I have saved, pay them down quickly using my salary income to increase the cash return (and equity) in them, and then save for the deposit (and use the equity) for more. I know I will need to see a financial planner about this cause other factors will come into play, but in general is this a good way to go?
angel – go for it, fiugures look good – you have it all sussed – well done…
ps make sure the hells angels clubhouse isnt next door!!
Hi Angel,
Sorry for being a contrarian but – you are borrowing ~$36K, using ~$11K to earn a net income (before tax) of $560/annum.
I reckon there are more effective ways of making money.
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping.
What are the growth prospects?
If the area remains flat, then there is no point in investing.
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
Click below to email meTerryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
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AngelWA
I have also been looking for cheap (<75K) +CF properties in regional WA. I found that there were better returns on slightly higher priced houses in the $80-100K range. Also the houses were generally brick and tile and had a longer life span in terms of income and capital gain.
I have studied some 25 properties in the cheaper range and have only found two or three with potential. I am also looking at the sub $100K market and have seen some rents as high as 200/week. The only draw back is the deposit required at these isolated places. I look for at least 10% return on the deposit + closing costs.I hope this helps.
Grant
Angel
Based on your numbers you would be better off spending your deposit on shares in a large Australian telecommunications company or bank.
Not that I am recommending any shares but it pays to compare what else you can get for your money.Clive
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