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Well great responses it appears there is mixed feelings about CG and CF+ve properties neither is right or wrong probably a good idea to have a mix of both, today I put an offer to buy a house where it has the potential to subdivide and put 2 courtyard homes of approx 350m2, I've done the dd numbers all stack up, good thing about this property is while I wait for approvals it's almost neutral cf and when I build the 2 I may keep both or sell one depends on cf, I feel a lot better now I've made a decision, the idea of buying a property and hoping it will grow sort of worried me, but I suppose it's all about what you want to achieve in your investment.
Does this development sound like a goer
Purchase $260k
Stamp Duty 11k
Sub division $20-$25k
Selling costs $10k
Holding costs $12k
Demolition $10-$15k
Building turnkey $320k
Total $647k
Approx $325k per dwelling, properties in this area and street of this quality are selling and sold from $375k are these kind of returns acceptable? to make this project viable? Or is it too tight around 15% Thanks
Thanks for all your replies really appreciate it…Ive managed to find a few neutral properties and a couple of positive ones the cash flow being a cuppla thousand dollars per year…arent I better sticking my money in the bank for a better return? seriously this is the part Im having trouble with…..or is the idea of paying the debt off so that you can maximize your cash flow??
Thanks newby, your right even amongst the dodgy areas there should be some nicer spots,
Thanks JacM, when you say slightly negative gear is that by you throwing cash at it or 100% financed.
I like your thinking though?