All Topics / General Property / What do you think

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  • Profile photo of comdom

    Property bought for $170000 repayments $940 monthly IO
    18 months later valued at $265000

    equity obtained $40000
    Loan $210000 Repayments $1140 monthly IO up $200

    Purchase IP for $40000 pls cost $46000 Loan repayment on $6000 $54 a month
    Rent for $100 per week $8 management fee rates $75 a month maintanence $41 per month + insurance $16 per month

    monthly return $400 – monthly costs $314 = $86 profit per month

    This would not cover the $200 repayments after you have refinanced .
    Am i wrong or is their a better strategy?

    Profile photo of westan

    sorry comdom

    what’s the question ?
    are you asking if a property bought for 40k that rents for 100pw is cash positve then most likely not.

    westan

    Profile photo of comdom

    Westan,
    The question is what is the advantage in accessing your equity from the Ip to buy more Ips if they dont become cash positive.

    Profile photo of comdom

    Has anybody else a strategy for this?[;)

    Profile photo of westan

    hi comdom

    as a general rule i’d never buy something that wasn’t cash positive (unless there was some fantastic twist to the property like a subdivision). i’ve bought a few properties (sold some) over the past 6 yrs and all of them were cash positive.
    $40k for 100pw will stuggle to be cash positive, unless you put some of your own money into the deal, say 20%
    regards westan

    Profile photo of comdom

    Thanks westan,

    Yes the $40K is the cash deposit, and the price of the house. So total $46K and their would only be 6K owing on the property but even so refinancing in this situation would not benifit you at all as a cash positive investment.
    Dom[;)

    Profile photo of comdom

    Thanks westan,

    Yes the $40K is the cash deposit, and the price of the house. So total $46K and their would only be 6K owing on the property but even so refinancing in this situation would not benifit you at all as a cash positive investment.
    Dom

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