DeanCollins wrote:

Uhm that’s exactly what I meant, there is a reduction in gross yields but that’s a compression caused by SLOSH its the same in every investment at the moment (which is why leveraged properties are as good as they are at 80%).

The fact that your gross yield percentages are coming down/compressing doesn’t mean that they arent following the capital growth increases it just means the percentage yield is coming down.

Didn’t you just contradict yourself?

What are your actual goals/plans here? The property is in Officer which isn’t that flash yet is nearly $400k. Why not skip the OTP idea and get a real house in a city that’s actually in growth phase like Adelaide or Brisbane?

DeanCollins wrote:

If you see sale prices in your area have gone up 5% in a year……then rents be default should have the same movement. I never understand why landlords aren’t on top of this.

They aren’t on par with each other.

A novice economics 101 lesson for you –
Supply and demand affects the price of everything from petrol to houses to rents to milk.
House sale prices may go up and down in price due to a whole bunch of factors going on.
Rents may go up and down in price due to their own factors going on, sometimes together with the above or completely separate. Sometimes not even in the same direction.

Wow this will be interesting.
I’d rather have an ongoing cost than an upfront one as stamp duty is expensive and restricts buying. This will allow me (and other investors there, not to mention cash-stricken first home buyers) to purchase more often thereby lifting Adelaide metropolitan prices up to match other Australian capitals.

I’m so glad I have a few cashflow positive properties Adelaide to take full advantage of the uplift :)

Most of metro adelaide is cashflow positive as are the outer suburbs of brisbane. Country towns in both Vic and NSW could present opportunities as well. I’d stick to mainland if you want some capital growth in the deal as well.

That’s a terrible idea and your broker should be fired

I did pretty well out of this.

I was on 4.74 at Westpac prior to the drop as @cjaysa; negotiated me a good rate. More recent properties are with CBA who also passed on full discount.

So 25-28 basis points will save me a few grand a year :)

Catalyst wrote:

Can i ask how you are calculating cash flow in order to make most of Adelaide CF+. Must be different to the way i calculate it.

i.e outgoing(interest on 100% finance, rates, insurance etc) minus incoming (rent). Only counting 80% is not taking into account interest lost by using a deposit. ALL properties can be CF+ if you pay a big enough deposit but we’d be just kidding ourselves wouldn’t we!

Sure. I count 105% interest into all my properties because that’s how they’re all financed. That’s the only fair way as well when taking into account opportunity cost.

Just a couple of examples of my own recent buys if I may – $147k purchase with 250/wk rent in one suburb, $250k purchase of a duplex pair in another with 2 tenants totaling $400/wk , there’s many others along similar lines. These are in the northern suburbs, can do similar yields in the south except with slightly higher numbers. If you’re willing to do extra work like rehab / reno there’ll also be more reward available.

Part of what I like about Adelaide is that the costs are fairly cheap. The insurance and council rates on my Adelaide properties are far less than most Perth / Brisbane properties. Maintenance is also fairly cheap – it’s far simpler to find a repairman willing to do something for $100 than it is in other cities.

What’s helping it along at the moment is the low interest rates, but may as well make hay while the sun shines, right? :)

• This reply was modified 9 years, 9 months ago by  D.T..

A long lease like that is quite likely to be either serviced apartment (avoid at all costs) or Defense Housing Australia, which can be OK if it suits one’s goals. I doubt bank really cares about the length of lease as long as it’s legitimate.

Your mortgage broker sounds correct though. There’s an amount that the banks calculators set aside each month for living expenses, paying existing debts , paying for the new loan (different to what the repayment actually is). They also deduct the rent slightly to allow for rental related expenses. Each bank calculates these things differently (which is why you need a Broker), but still needing an income source (from job or business) is pretty vital.

So a couple of ways of going ahead from here
A) Buy a place outright that doesn’t need a loan
B) Get a job / start a business to have income that can be used for loans
C) Put it in your name as well (I assume you’re employed or have a business).

First, you need to get hold of the PM so that you can find out whats actually happening to stop the guessing game. If you can’t reach the PM by email, try the owner of the company by email and/or by phone too.

Secondly, just because a lease ends doesn’t mean they have to leave – in some states the lease continues onto periodic automatically. It’d be useful to know if a letter had been sent expecting them to vacate on X date.

If your PM is smart, they’ll know which parts of that to claim on insurance and which bits to claim on bond so that minimal is incurred by yourself. Hopefully there’s both an ingoing and outgoing condition reports with photos as needed to back up those claims.