Hello everyone. I am (hopefully) going to be purchasing my first property from a family member in the near future. I plan to live in this house and hopefully develop substantial equity over the next year or two.
After that, I would like to begin investing in some positive cashflow properties. I know the big thing right now is capital gains, and thats fine for some people, but Im looking to get some positive cashflow from the investments I make. However, Im finding it very difficult to make this happen.
I was wondering if anyone here has positive cashflow properties and would be able to talk a bit about them. Specifically looking for people who found investments who brought in money straight away. I have thought about mining towns other rural areas (seems to be the only place I can find thats cheap enough to be positively geared), but I am questioning whether they are a smart move given its my first investment.
Anyways, if anyone has any comments that’d be great
Hi Bennett
If you haven’t already, have a read through
https://www.propertyinvesting.com/strategiesCheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
Hi Paul,
Thanks for your reply. Yeah I have taken a look at those sites and Im also in the process of reading 0-130 properties in 3.5 years.
Looking at the current market and assuming interest rates rise to roughly 9%, it is very difficult to see how I can find an investment property that can be positively geared. I know that I am not the first person to realise this and I am sure it is not impossible to find positive cashflow properties – however I also believe it is not as easy at it is perhaps suggested in Steve McKnight’s book
I would be very interested in hearing how people have managed to find positively geared properties recently
Hi Bennett
When you mention “investment property” I think you’re thinking of what I call a “buy and hold” investment property. May I suggest that as you continue to read Steve’s book you take the time to research the other positive cashflow “investment property” strategies he uses.
I’m not much of a buy and hold specialist so I’ll leave others to advise you concerning that strategy. However I can tell you that times are looking good for other positive cashflow strategies right now and an interest rate of 9% may even improve the environment for these techniques.
Good luck.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
Hi Paul,
Yeah, I was talking about the buy and hold strategy (ie. trying to get positive cashflow from rent). But as I said, seems very hard to find a property that is cheap enough for the rent to outweigh any interest repayments.
Could you be more specific as to the other strategies that are looking good? Perhaps now as the interest rates rise, housing prices will fall and it might be easier for me to find good ‘buy and hold properties’. What other strategies might be worthwhile in the next few years?
I am nearly finished the book but would appreciate any information yourself or others could share.
Bennett.Hi
I just purchased a positive geared property in WA. (I live in NSW). It all came down to RESEARCH, RESEARCH and more RESEARCH. What I mean by that is….I subscribed to Australian Property Investor Magazine. This has lots of good info including growth/decline rates for each State. Has good stories from other investors and info from lenders etc etc. I also read lots of books. When I found an area that had a population from about 6,000 up (my own personal investing criteria) I went to that State’s Govt. website to check out anything else I could find about the area. If the town is supported by mining for example, I find out the name of the mine and look at their website to see what they have planned for the next so many years…..also speak to local Councils to see if there is any new infastructure planned for that area etc. I also surf many different property investor forums to read as much as I can from people just like me. On realestate.com I use the free suburb snapshot profile that they have available. I enlist the help of as many real estate agents as I can. I have to say though, that my first property purchase was scary. I think only because I felt right out of my comfort zone but as I passed each stage things became easier. Hey, I even added my own clauses on the contract…things like valuation, pest, building, title encumbrances/easements, flooding, you name it, I put it in there. Only one clause was rejected….didn’t I feel smart. The negotiation stage was exciting. I stuck to my guns and ended up securing the property well below market value AND it’s positive cashflow all the way, with very low vacancy rates for that area. The agent did try and force me to make quick decisions, but I kept telling myself that I was the one in the drivers seat and if I pulled this off, it was meant to be, I didn’t let emotion rule my decisions. So if I can do it…I gotta tell you, anyone can. Now that my first one is out of the way, I can’t wait for the next one. They say it gets easier, and I do believe it does. Happy hunting and good luck!!!!
Hi Nieco,
Thanks mate, thats great news. Also a very good guide on how to get started. Do you think you could email me some of the website / investment forums you have been following? Email is shamad at iinet dot net dot com
Congratz on your first buy – sounds like a doozy
Hi Bennet,
If you want + cash flow from day one buy your IP’s in New Zealand… It’s easy to do, I have 4, and there are forumites here who’ll do all the searching for you for a reasonable fee.
Vheers, Nobleone. [biggrin]
“Making mistakes is just another another tool for learning.”
Other ways to achieve cash flow positive properties:
*larger deposit.
* value-add for the tennant with white goods, furniture, cable tv etc to gain a premium rental return.
* renovate/rejuvenate property for better rental return (and capital gains).
* properly research potential tenants before letting to them (to ensure they won’t be ‘bad’ tenants), give preference to those who are willing to sign a longer lease (thereby cutting back your vacancy rate).
*wrap or lease to buy deals.Cash flow positive places are out there, you just have to look harder (any fool can get capital growth alone).
Hi Luci,
Thanks for the reply. I have now finished Steve McKnight’s book and thought it was quite good. However, it probably doesnt go into quite enough detail into actual techniques to find postively geared properties – it describes some methods but doesnt really explain how to make those methods happen.
I guess at the moment I am stuck when it comes to finding properties at a cheap enough price to be able to rent out above interest repayments. Are there any general techniques to find properties like this? For example some people speak of buying properties from banks that are in forclosure – has anyone done this? does anyone know of a starting point to find more information regarding this?
I appreciate all the replies and some of them have definitely given me something to think about
Bennett.
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