Hi Redwing:

I think I know the city you’re talking about[]. I agree that it’s got good growth prospects – the average price there is lower than the coastal town to the south and the coastal city to the north.

That yield % is OK (not great) for that city. But I’ve found that charges like rates are proportionately higher for something that rents…[Read more]

Multiplying by 1.6 may guarantee it’s positive, but only if interest rates don’t go up much. This is a yield of somewhere near 7%. Better than average but not enough for some.

To me the ’11 second’ thing is just fancy jargon for a yield a bit over 10%. With this interest rates could rise a bit and you’d still be cashflow positive. Or you could…[Read more]

I can see what Dean means.

I haven’t done any active looking in Perth, but I’ve heard good things (yield-wise) about the Kwinana and Armadale/Gosnells areas.

I’ve also been told that Broome is fairly go-ahead at the moment, but don’t have the stats.

When I last looked you could get a place in Kellerberrin (and similar towns) for $40k. If you…[Read more]

Hi Sooshie – I just happen to love reading []

I find I’m often racked by indecision, lethargy and think of reasons not to do things. I am also sometimes let opportunities slip by.

But when the evidence is overwhelming that the potential benefits far outweigh the risks, I can move quite quickly. The books/software mentioned above, along with my…[Read more]

Allan, it depends on what you want and where you live. Four questions:

How important is having your own home that you can do as you like and no inspections?

How focussed are you on your financial goals, or do you have lifestyle goals as well?

How long do you intend to live in the one place?

Are you in an area where prices are high and yields…[Read more]

Here’s what I have in my library and my comments:

‘Streets Ahead’ has lots of good stuff in it, but bear in mind that it is biased heavily towards capital growth rather than cashflow.

For example, it compares one growth property with one cashflow property, when it would have been fairer to compare it with 2 or 3 (due to the often lower purchase…[Read more]

I didn’t participate in the online chat afterwards but looked them up the next day.

A real ‘dog’s breakfast, I’m afraid. It was very hard to follow the threads and I didn’t get much out of them; my own reading, and forums like this and the Somersoft one have been far more educational.

Thanks for clearing that up Paul. Though I found the way this stat was presented ambiguous (I assumed property earnings, whereas it was actually average weekly earnings).

A couple of points:

1. The US appears to be in a different stage of the economic cycle to Australia at the moment. This may affect comparative prices.

2. Wage averages in the…[Read more]

‘this does not just relate investment units but ALL property’.

How can this be?

There is not just one property market in Australia, but several. The current property boom has affected mainly capital cities and some country areas. Other areas have had NO BOOM. I would expect the metro areas would bear the brunt of any ‘correction’ or levelling…[Read more]

Hi Paul – I’ll rephrase my answer, which I think more clearly answers your question.

Q. ‘surely a renter can see the difference between a $100k and $200k property for the same rent’

A. I would think they could too, though factors such as convenience, number of bedrooms, access to transport & parking would be more significant considerations than…[Read more]

Surely borrowing money for one purpose (reno), but actually using it for another (deposit) is fraud, and could endanger one’s credit rating?

Peter

Andy, for this exercise, I assumed that the positive property was in a country (or mining) town with a fairly static population. Thus I didn’t want to assume any capital growth.

However there are some areas where there are cashflow positive properties with high growth potential. Margaret River (WA) in the mid 1980s was an example, and has…[Read more]

But what if you buy in a town where most properties return 8-9%? Provided the vacancy rate is low, the tenant therefore has little choice but to pay these rents.

I stepped into the renter’s shoes when selecting my IP. It is along a well-known CBD street, and is 10 min walk from the centre of town and closer than that to the supermarket and…[Read more]

Though someone at 30 (contemplating retirement at 40) might want to go cashflow positive also.

Particularly if they also have a good portfolio of shares for some cap gain.

Some people measure their financial progress towards their goal by net wealth. ‘My wealth grew by $20 000 last year, so I did OK’. I did this when capital growth was my key…[Read more]

I’ve gone through this exercise myself and made up a spreadsheet with all the salient calculations. I reckon anyone considering any form of property investment should do it. If you haven’t you’re not ready to invest IMHO.

You should also be aware of what you want. Do you want to be a millionaire by age 45, or financially independent by then?…[Read more]

One way is to restrain borrowing, maybe by having a debt to equity limit (say 50%). If you already have $100 000 in assets, you can borrow 100% on a a $100 000 property, so you owe a max of $100k on $200k assets. As you pay the property off your situation will improve rapidly. This is a fairly conservative approach and is based on limiting your…[Read more]

Hi Dan

In relation to 1. unless I wanted to be in debt for a long time, pay heaps of interest to the bank, and not actually own very much, I would always take out a P&I loan when buying a property chosen for its cashflow. If you don’t you could end up owing as much on the property as it’s worth. Your only benefit will have been a source of…[Read more]

Isn’t he one of Robert K’s disciples?

Peter

I would recommend getting both a building inspection and termite inspection done, and make these a condition of the sale. You should nominate the inspector, not the selling agent. I know the standard Real Estate Institute contracts in WA have inspections as a standard condition.

There are building inspectors who are builders, or those that are…[Read more]

The title should be simple, succinct and very general. It should tap into people’s aspirations. This could be based on current workplace worries, eg longer hours, unpaid working hours, less time with family, etc. There is also a yearning for people to take control of their life, which is a key determinant of happiness. The title should address…[Read more]