I’m new to all this (first post here and all), and haven’t quite gotten my head around everything yet… but there are a couple of possible red flags that I can see.

First of all, I notice you made your calculations on it being rented the full 52 weeks a year – you might be lucky, but 49 or 50 weeks would be better for due dilligence purposes (best to be conservative before you spend your money).

Secondly – what’s your adversity to risk? it could be a concern that you only have an IO loan. Reducing debt is a great strategy for offsetting risk… interest rates only need to go up 1.5% for this cash flow positive property to become cash flow negative – factor in a couple of weeks a year with no tenant, even unexpected repairs and it needs an even lower rise in interest rates to reach this.

Basically – how much negative gearing can you handle/afford… maybe interest rates won’t reach those heights for a couple of years, but then again plenty of people are predicting they could be there within 6-12 months.

I don’t want to put you off it or anything, just want to put these questions out there (you might have already considered them and are happy with the risk, but the margin is pretty fine)… I’d be interested in hearing what other people here would do in this situation – I’m in a similar position – thinking about my first IP, and I’m not yet sure that I’d know my answers to those questions at this stage.

The other thing to consider is possible capital gain – if it is likely, then that would certainly offset the risk of possible negative cash flows, provided you could maintain it (haven’t had a close look at Brisbane CBD appartments, but they do seem a bit over supplied like other cities at the moment).

Hope that helps… like I said, I’ve only just started researching the whole positive cashflow property thingy, so there are no doubt people with a lot more experience here that may have answers (or further questions) – but these are the main issues that I’m trying to come to grips with at the moment… nothing that can’t be overcome by propper exit strategies and risk minimisation I would think (hope)