New to the board. Have been negative gearing (due to income) for the last 5 years, but am seeking to diversify somewhat and get into some positive gearing.
1. Steve’s filter for determining if a property is likely to be cashflow positive. Halve rent, add three zeros – should be your buy price. Take three zeros off purchase price, double – should be the rental achieved. Then do further due diligence on other expenses etc.
2. Principal Place of Residence – your home that you own (with or without the bank [])
When you’re purchasing a property, you work out the rent it will produce then divide it by 2, and then times the result by 1000, the answer should be roughly the purchases price of the property.
So if the property price is on or less than the purchased it is worth looking into…
It is used as a filter to see if a property will be a positive cash flow, bear in mind that this is only used as a filter and doesn’t mean you should go out and buy a property because it passes the 11 second rule.
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