Answers to “Where to Find CF+ Deals”

Manoj,
very boring story

Would it be rude to ask where?

So I've spent the last 3 or 4 days working through this thread. Very enlightening!

Some recent replies sparked my interest…

Basbog – what do you know about Morranbah? Have you invested there? Would love to know more.
Nathan_b – I would also love to know where you spent the 22k + 25k reno… if you don't mind sharing some info?
Hewlett25 – I would love to get some more info regarding the Tasmania investments you have done.

Please either reply on here; or feel free to email me at zac (at) janes.com.au

I look forward to hearing from each of you!! TIA (which equals Thanks In Advance)

Zac

Just a quick update on the Market here in NZ.

Many investors have been holding off, sitting on their hands for the last few months, waiting to see what our GOVT sprung on us in the way of proposed changes to the tax rules on rental property. There were a few nasty proposals being thrown around, IE the introduction of a capital gains tax, or the outright ring fencing of tax losses and the investor loosing the ability to offset these against personal income.

Well, the GOVT delivered the budget last Thursday, and they were actually reasonably friendly towards us property investors.

They did not introduce Capital gains tax, and did not stop investors being able to claim losses etc. I have written an in-depth blog about the changes in the budget, and how they will effect investors and the overall property market – Read the blog post here

All in all I think it was a great budget, and the heavy cuts across the board to the personal tax rates, along with the surprise cut of the company tax rate is certainly aimed at creating economic stimulus for New Zealand. Which can only be a great thing for the property market and the Country as a whole.

I think the general consensus is that the playing field for us property investors hasn't been effected greatly, and we are seeing local investors step back into the market already.

There are still some great deals around at present (we are certainly putting a few excellent pre-tax cash flow positive deals together currently, and they are getting snapped up fast by our clients both here in NZ and in Australia) However with the budget now behind us, and investors now having the certainly of knowing what the changes actually are, I don't think these great deals are going to be around for that long, as investor activity picks up once again.

Our last deal was a 3 bed home, that we secured at 2/3rds its market value, and was showing a 13% gross yield – Not surprisingly it was snapped up by the first person to contact us about it.

The time to be buying is NOW, before the market picks back up again.

Happy Investing

KPG

As an aussie tax resident, your still liable for cap gains tax on a property in NZ so whether the NZ tax authorities charge on the sale it is irrelevant.  Great if your a kiwi though!

Josh

Did some quick numbers on James’ deal…
If you borrowed $198,000 (using equity in another property), if you could borrow at 7% it would cost you $266.54 to pay interest only.
Is the rent $390 for each unit?
If so, $390 – $266 – $160 outgoings comes to a loss of $36 pw. Does the outgoings include strata fees?
Of course, if you have a deposit the numbers would be somewhat better.

As these are retirement units, can a tenant who is retired but does not own their own accommodation afford to pay $390pw rent?

Just asking a few genuine questions, may be good answers to all these questions.

quickchick

wilsonong

That's because positive cashflow properties aren't merely FOUND – you find POTENTIAL, then TURN them into positive cashflow.

Now sit back, digest that, and you'll see why you haven't found anything in 6 months of search. Please don't expect you'll find positive cashflow properties by sitting in front of the computer with your calculator and on realestate websites. You need to THINK about what you can DO to those properties to generate a positive cashflow.

I've done it.

And Steve and his mob are hardly hype that you allude to – it's not get rich quick, it's get rich with a vision and a strategy.

Hi Folks,

There are many places in the world where postive cashflow properties can be found. Right now in the US prices in many regions are severly depressed because demand to purchase has dried up… but demand to live with a roof over one's head continues. What's more, people who were home buyers (or potential buyers) are now renters, so demand to rent has increased. You can buy properties that are genuinely producing more cash than they consume, even with 70%+ LTV borrowings.

Japan is another place where the demand for rentals is much greater than the demand to purchase. I have seen many properties there – particularly commercial – with net returns of 15%+, even in Tokyo. I own several properties there, so I know the market well, although I have not been buying for development, not cash flow.

Malaysia is the only other overseas market I know fairly well and while they are closer to being neutrally-geared, it's still not difficult to find positive cashflow properties there.

Of these 3 markets, I'd say carefully-selected US properties offer the best potential because (a) it's relatively easy for Australian's to borrow USD, (b) the population is growing, meaning demand will recover when the economy does and (c) tax laws are favourable, especially if you decide to invest using a self managed super fund. I recommend Dolf de Roos as someone to watch and follow in the US – he has his pulse on the market and knows where to buy and where to steer clear of.

If Australia is the only place you want to invest, let's not forget that cashflow positive after tax is still cash flow positive. You may not make a fortune overnight – become a property developer and take bigger risks if that's what you want – but conservative 'investing' in real estate will make you wealthy over a 20 year period.

I've done many things in real estate, from passive investing through to active property development and I can say with hand on heart that passive investing is far easier and generally just as profitable over the long run as active development. And if you simply must be a developer (that includes you renovators out there), then I would encourage you to put your profits into passive real estate investments.

<moderator: delete advertising>

Hope this helps someone out there. I'd also love your feedback about our approach to investment property analysis and selection.

Cheers,
Jim

Very good piece of advice, that if followed would stop many developers eventually going broke.

New to this IP thing BUT hubs and i have managed to purchase 2 properties first for 195,000 second for 200,000  both in regional area, both running at a small loss but the equity on first has grown wonderfully on the firs,t in only 9 months.. we are not looking to make a quick buck , we have great tenents and excellent agent, looking forward in +CF in very near future , These lower IP only required small cosmetic face lifts that hubs and myself are very handy at doing ourselves all is great most properties in our area are going for over 300K  we have been lucky , second was purchased by chance of us seeing agents and telling her we are after second IP .. love all the advice and comments , ive leant alot in just a month