Hi all,

just a few comments / questions from another novice.

The way I'd be looking at this is:

1. Do you want this property to be CF+ or looking for capital gains?

2. Do you need to take a loan out to cover a purchase price (how much will obviously impact the CF)?

If the above are true, a CF neutral formula looks like:

Fixed Costs + Loan Repayment = Gross Rental Yield

or

Loan Repayment = Gross Rental Yield – Fixed Costs

Where Fixed Costs is maintenance, rental management, Council rates etc.

From this you can work out what the loan repayment can be, and from that an acceptable price. If the loan / price works out less, you’re into CF+.

This is just if you’re looking at Cashflow rather than capital growth and yield.  The yield figures above really just outline the potential payback of investment.  You’re not taking any costs into account, which will obviously really impact your true “yield”.