I purchased my property just over twelve months ago, but have only just recenlty started to rent it out. Can Anyone give me any hints and tips about how negetive gearing, positive cash flow etc, any info would be great as my knowledge of the property market is limited.
Thanx adam
positive cashflow is when there is a surplus of cash left over after all expenses (interest rates, manager fees etc) are deducted.
A Negative geared property is when the rent is not sufficient to cover expenses. In this case the shortfall can be claimed as a tax deduction to offset your salary (if you are a high income earner).
If you put up some numbers of cost of house, expenses, and rent, we may be able to work out how much you are loosing or gaining.
Why a 12 month vacancy???
We buy properties in all conditions. Can offer Immediate Cash Settlements, No Real Estate Agents Required
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Megan
Adam
Work it out this way.
Your net income from the property = $153 / week.
which equals approx $662 / monthExpenses = $895 / month mortgage repayments (Assume P & I over say 25 years)
Rates = $100 / month
Utility Rates – $$83 / monthAlready you have negative cash flow of $416 / month. Be reducing your loan repayments to interest only will only help a little.
Ignore Mortgage Insurance $339 (unless of course you mean Buildings Insurance) as this is a borrowing cost and can be claimed over 5 years or the life of the loan.
Equity is the difference between the value of the property and the loan amount. However bear in mind usuable equity is not 100% as the banks will only go to 90/95% on a refinance so is less than the valuation.
Cheers Richard
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