Hi All,
I have been following the forums for a while now, but have been unable to find (perhaps due to not looking hard enough..)any discussions on the merits of a (narrowly)cash flow negative property, that is pushed up into postive cashflow by the tax you get back from the non cash deductions (depreciation etc).
I have found a couple in Bunbury, WA (maybe they are no big deal, I am new to PI and would not know).
Basically the rent covers all of the mortgage and about half to two thirds of the cash outgoings, leaving a cash shortfall before tax of about $1000. Factor in the tax back on depreciation etc and it pops its head above the water to the tune of about +ve $1200 p.a.
Cash on cash (post tax) around 12-15%. Gross yield is around 8.3%
Is this something to be excited about? It seems good to me[?]
Anyway, views or opinions would be most welcome.
Warmest regards,
Brad Barr
Brad,
Post tax +ve cashflow by ” a narrow margin ” is great if the desired outcome is buy and hold for capital gain. But what Steve is all about is producing income via positive cashflow not waiting for your tax cheque to bring you in front.
Personally I think there is a lot of merit in the type of investment you mentioned because your +ve cash flow cannot be taxed.Just hope the narrow margin is not too narrow. The main prob with post tax cash flow is that your depreciables run out after a while. A good 2.5% building allowance goes on for 40 years though.
MJKyou can actually find heaps of +ve Cash flow negatively geared properties in Sydney rather than in a country town
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