I don’t mean to sound like a nag for advice but I’m a little anxious about my 1st IP purchase.
I have made an offer on a property (Nothing yet signed or set in concrete) however, after playing with the numbers today on the cash flow calculator I have realised that the property has a negative weekly cash flow of $7.
I know that with tax deductions this will become positive, however, it is not “Positively Geared”, rather “Cashflow Positive after tax”
My aim is to not put my hand too deep into my pocket, which this satisfies, however, I am unsure how the tax bennefits will assist in the years ahead.
I am planning to borrow 95%. If I only borrow 80% it will be Positivly Geared, however I would rather use the deposit money for other properties.
Does anyone have some usefull advice?
Thanks,
Simon.Hi simon
do you want some help ? tell me your purchase price, weekly rent and rates on the home and well see how it looks.
regards westan
Break into the foreclosure market in the USA or Cash Positive deals showing 15-25% Returns in the USA email me at [email protected] to join our database
Thanks westan,
The purchase price is $145K.
The rent is $255p.w (Tenant just signed a 1yr lease). The rates are $1910 p.a, and the Property Management fees at all the local agents are 10% of rent.Thanks,
SimonOk Simon
let assume its rented for 52 weeks of the year (i’m being generous).
Income $255 per week equals $13,260 per year
Now expenses if you borrowed 95% of the $145,000 That would be a loan of
$137,750 at 6.75% equals $9,300 per year
Then we have
insurance of say 300 per year
Rates 1,910 per year
Management @ 10% 1,326 per year
repairs and maintenance 500 per year
Total Costs $4,036Costs plus interest on loan $13,336
So you are right your at break even, if you had weeks vacant you are down $255 per week. So with a home like this you need capital appreciation to make money, no growth, no Money.
Any rise in interest rates will hurt the bottom line as any increase in rent will help.
If you have a principal and interest loan you will need to pay this, however you will also get some tax benifits depending on the homes age etc.regards westan
Break into the foreclosure market in the USA or Cash Positive deals showing 15-25% Returns in the USA email me at [email protected] to join our database
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