[SabbathenMember@sabbathenJoin Date: 2012Post Count: 4]

January 30, 2013 - 10:05 pm

Thanks Jamie,

No I would only be looking to borrow 80% of the purchase price to avoid mortgage insurance, I have the cash for deposit and closing costs.

Cheers.

[SabbathenMember@sabbathenJoin Date: 2012Post Count: 4]

January 30, 2013 - 8:58 am

Rather than start a new topic I was hoping I could get some opinions and guidance on this situation to see if I am on the right path.

Using Steve's 1% rule I have started to short list potential cash flow positive properties but upon further inspection it seems I am still way off returning a profit.

Example below:

I can borrow at 5.54% so my 1% rule should be 6.54% minimum

Expected annual rent of $15600 divided by asking price of 229000(hypothetically even if this property could be bought for 200k it still seems to be making a loss) multiplied by 100 gives me 6.81%

When I start to minus strata costs, rates, loan repayments(based on 80% LVR) and property management it completely destroys any positive cash flow.

Is this where tax deductions on owning the investment property come into play? Should I be including them in my number crunching because at the moment I am finding all the deals i'm looking at aren't even getting close to being neutral.

Again thanks in advance for any advice.

[SabbathenMember@sabbathenJoin Date: 2012Post Count: 4]

January 30, 2013 - 2:14 am

Thanks for all the replies, this is a great forum.