- Dazzling wrote:Sorry to sound like a cynic, but I am happy to be proven wrong. Anyone???
Aussiecam and leewizza,
7. Advertising and negotiating our little sox off
We are happy to report that the “ugly duckling” property has now, together with our marketing and negotiating skills (developed over 11 years) attracted a “beautiful swan” Lessee who has committed in writing to a 15 year lease over the property, starting at a rental yield of 10.25% nett. At the end of the first 5 year term the rent will be 12.4% nett.
Without giving away your trade secrets, this marketing and advertising is of interest to me. this is part of the equation and confidence need to believe you can make/create a deal.
What kinds of things do you do and look at to market, advertise and negotiate.
If you are not experienced with this, it can be daunting, without the first hand experience one may not even know where to start and therefore have some confidence that they can turn things around.
But thank you for sharing.
Regards,
NYes cash flow positive properties aren't the easiest to find but sometimes some good reports are available on hotspotting.com.au
for a cost of course!I agree with another post that mentioned shared places or places that may have a secondary add-on dwelling (eg. like a granny flat), that can be rented separately can also return quite good rent (you are basically getting two rents in one location!)
regards,
Peter S ([email protected])High Rent Return Properties – http://www.ozpropertyinvest.com/hy/2022.html
Has anyone here used hotspotting.com.au? Is is worth the $90 per report?
Cheers
hi there lbluedento,
yes I have used hotspotting and yes the reports are quite expensive but if you are serious about a particular property or topic involving properties, then the reports are up-to-date and worth a read. If you end up purchasing a good property because of the information given to you in the report, I guess the $90 is not too much to pay. But if you just want to read every report they produce then it could become quite expensive! The advice is professional and in the know!
regards,
Peter S ([email protected])
High Rent Return Properties – http://www.ozpropertyinvest.com/hy/2022.html
I'm finding this thread really interesting reading, not only for the different turns it takes but because of some of the ideas expressed.
Frankston fella states, in my opinion quite correctly, that you can't just expect to find CF+ properties easily. Camscott says, "every single property bought in sydney can be turned into a cashflow positive property if managed correctly," which is at best misleading. The implication that EVERY property in a major city can be CF+ lacks foundation and I am positive almost every property expert would agree. Frankly, you do need to know where you're looking and you do need to do some legwork.
Basically, it comes down to this;
1. If you find a property which has great rental return compared to what you'll pay for it, then it could be CF+. Do your numbers, and if you have done a lot of homework (and been a little lucky) then you may have a CF+ deal, even if you finance it from a regular lending institution.
2. There are some properties which might give you good rents but they're not CF+ unless you can arrange some kind of financing deal which will bring the numbers into your favour. This is where skills in arranging vendor financing come into play – they can turn a property which is pretty good into a CF+ property.
3. Some properties can be divided (such as those mentioned here which have a granny flat on the block) so that you're able to receive rent on two dwellings for-the-price-of-one. It's worth looking at these.Failing all of these, you're unlikely to find a CF+ deal. You do need to do legwork and you do need to spend time. Hotspotting is great if you are looking at a particular area and you'd like more information, but it's not so good if you're still looking for an area as you'd need to buy a few reports and, as previously mentioned, this can get expensive. Consider buying a hotspotting report and then seeing how much of that information you can find yourself online. You might be surprised.
If you're still reading this then here are a couple of locations which might give you some decent returns. Try Bathurst (NSW), Ballarat or Mildura (Vic) or maybe some outer northern or southern suburbs of Adelaide. Add this to my previously mentioned SE Qld spots and you've at least got a start.
Good luck!<br /
:)” title=”>:)” class=”bbcode_smiley” />Here are a few locations that might work for you…
Hi All!
Yes I do believe that there are +CF properties to be sourced if investors become creative in ways to receiving high yields.
I have found a few, but what suits one persons financials does not necessarily suit another.
Because i chose to leave work and dedicate my life to purchasing investment properties, I have no choice with the banks than to borrow thru a Low Doc Loan. This means that any borrowings would be at 8%+. So even if i purchased a property with a yield of
10%, it would still be negative geared assuming I am putting no money down on the deal.
So my dilemma is that although i can source properties for 8-9%+, it still isnt enough. I understand that after a few years it may ell become neutral or positive, but I need cashflow NOW!
So even by becoming creative and adding value to the property to increase the yield it would still mean that i have to borrow further thus increasing my mortgage.
I can put money down on the purchase but this would limit the amount of properties that i can accumulate in the future.
Can anyone enlighten me on other ways to turn a 10% deal into a positive cashflow????
The only other way i can think of is to have a tenant that is willing to "rent with an option to buy", this will then give me extra money each week (rent plus weekly deposit on purchase) but im not familiar with this method or how complex it is to set up or find such tenants?marq001 wrote:Hi All!
Yes I do believe that there are +CF properties to be sourced if investors become creative in ways to receiving high yields.
I have found a few, but what suits one persons financials does not necessarily suit another.
Because i chose to leave work and dedicate my life to purchasing investment properties, I have no choice with the banks than to borrow thru a Low Doc Loan. This means that any borrowings would be at 8%+. So even if i purchased a property with a yield of
10%, it would still be negative geared assuming I am putting no money down on the deal.
So my dilemma is that although i can source properties for 8-9%+, it still isnt enough. I understand that after a few years it may ell become neutral or positive, but I need cashflow NOW!
So even by becoming creative and adding value to the property to increase the yield it would still mean that i have to borrow further thus increasing my mortgage.
I can put money down on the purchase but this would limit the amount of properties that i can accumulate in the future.
Can anyone enlighten me on other ways to turn a 10% deal into a positive cashflow????
The only other way i can think of is to have a tenant that is willing to "rent with an option to buy", this will then give me extra money each week (rent plus weekly deposit on purchase) but im not familiar with this method or how complex it is to set up or find such tenants?Hi,
Without knowing your full situation, the short answer (and its probably not what you wanna hear) is you gave up your job too soon. This is quite a common mistake.
It's best to keep your job/regular paycheck a little longer, so to ease the process of attaining mortgage finance. Build up your portfolio to a reasonable size (measured by level of passive income, not number of properties) before throwing your JOB in.
It also helps to 'trade' a few properties along the way as well to create chunks of cash that can be used as 20% cash deposits. This aids getting finance, as its easier to qualify for 80% mortgages, than it is for 100%. It also increases your cashflow as your debt level is lower.
(Trade properties that don't suit your long term buy and hold strategy, I.e. Not built from permanant materials)
Hope this was of some help.
yes good advice Clint,
cash flow is the name of the game. It gives you freedom to work on saving for the next investment rather than trying to get enough each week to pay the bills and seeing if there is any left over for investments!
Creating passive incomes is a great idea but before we get to that point we do often need a steady job with income to provide for our foundation – and once we are stable we can then carefully launch into other propositions/investments etc….
Regards
Peter S ([email protected])
High Rent Return Properties – http://www.ozpropertyinvest.com/hy/2022.htmlWhat does CF+ properties stand for??
Primrose wrote:What does CF+ properties stand for??
Hi Primrose,
It is Cash Flow Positive Properties. Which is a property that generates enough rental income to cover all costs of owning (including mortgage payments) and there is a surplus rental income left over, so in other words, a property that pays you a passive income to own it, even when financed at 100% of the purchase price.
Hi All
Im a newbie,and Im also looking for 10% + yields – I have spent the last few months reading and learning and am setting up my finances now. There are 10% yields out there – mining towns – Blackwater, Moranbah, Dysart & Middlemount to name a few. While I wouldnt fill my property portfolio with them I think that one to kick off to provide positive cash flow while I learn about applying creative solutions to maximise yields will suit me. I grew up in Blackwater, and Im looking at properties in Blackwater & Middlemount to kick off, theirs still plenty of years left of coal up there, but people need to do their own dd.
Im looking at properties and thinking about how I might implement/maximise the yields on a property and sorting out the type of strategies that would suit my husband & my own skill set!hi there newbie!,
glad to see you are learning up heaps about the positive cash flow process. If you do it right, it can work out very well for your husband and yourself. The setting up of finances correctly is so important, keep up the good work. All the best in your quest!
Hi
Thanks for that positive feedback proptyman……………… I kind of do feel Im on a quest ………………….. buying back our time quest! Has a bit of a ring to it…………lolyes time is so valuable. I guess that is why property investing is so appealing.. It is fun and worthwhile learning about the market but once you get some research/education under your belt you are in a better position to make sensible decisions. Then after investing well, you will have time to reflect and then venture into your next possibility.
This may have already been said in these forums, but a good way to find CF+ properties, and save a hell of a lot of leg work and time, is to use Real Estate Investar software.
As I said, this may have been mentioned once or twice (I didn't troll through all 19 pages of this topic to find out), but the tools are incredibly powerful, and can literally find suitable properties in minutes. Obviously each person would have to then narrow down results to match their own financial situation, but at least you would have a selection to choose from and wouldn't have spent the entire weekend/week looking for just one or two.
And on top of the already clear advantages that these tools have, it's possible to trial the tools first. So ask yourself, what do you have to lose?
Matt.B
Hi all
Every Investment property can be a CF + property – read below
I understand the benefits of CF+ properties – however wonder if readers are aware of the tax office determination TD 2008/27
Click here to read the determinationThis determination is about deductibility of compound interest on investment properties.
The logic is simply, if interest is deductiable because the loan is for "income purposes" which means that "interest" on "unpaid interest" is also deductible.
You can have many properties under one loan and all the rental income from these properties can be used to pay your home loan which is not deductible. Interest on the investment property can be capitalized or paid by a line of credit account each month – there is no need to pay any interest back to the bank, since it's capitalized – In Hart's case, the courts agreed that claiming compound interest was correct but the way it was done came under Part IV of the Income tax act – remember that all the interest expense for the investment property and the loan which is pays the interest (assuming 2 loans) for the investment property is deductible.
Infact it is possible that you have been claiming compound interest without even knowing it (depending on what type of loan you have)
If you have a loan with a bank which charges interest "calculated daily and charged monthly" – what this means is that interest for the second day is being charged on principal amount and interest amount of the first day. For example if the loan is for $1,000,000 and the interest for day 1 is $200 – then 2nd day's interest is charged on $1,000,200 and not the original principal amount of $1,000,000 (if you do not believe me, check your bank statement) – which means that interest will be more than $200 for day 2 and so on …. on day 2 you are being charged "interest on unpaid interest of day 1" or "compound interest" – this compound interest will be charged monthly to the account. If you have claimed this monthly interest amount in your income tax return – you are already claimed compound interest as a deduction.
Every investment property can be a CF+ property – because if you decide not to pay any interest back to the bank – simply capitalize it or decided to pay it when you sell the property – all the rental income is cash flow +. – the idea is that we are not paying ANY interest AT ALL to the bank, forget the rate of return Vs Rate of interest argument.
The next obvious question is how / why the banks will lend you the money to purchase this property – The answer is very simple – this strategy can only work, provided you use equity to purchase that property – say you borrow only 70% or if you have enough equity in your own home or other investment properties which the bank can use for the 2nd loan to fund interest and interest on interest.
Remember there is no need to pay anything to the bank, no return of capital and no return of interest amount and no interest on intrest amount – provided there is enough equity to hold the borrowing – this strategy is NOT for new investors.Happy Investing!
If you want to read more…. find my articles on the net – it's easy – simply google my name.
Manoj Abichandani
Hi fellow investors, Not sure if this has been asked recently in this post, but what is the general perception here on Student Housing? I have read a few previous posts from 2009, some positive and some negative. But I am interested in current 2011 opinion.
I personally own 4 x CF Student Housing investments properties, bought keeping the following principles:
1. FIRB status in the building that allows me to resell to foreign purchasers in the future (opens my re sale market).
2. Units can allow Owner/Occupation for owners family members who are students (opens my re sale market, these buyers are plentiful, buying to place their kids in the property).
3. Good Yield 8% or higher.
4. Higher than normal refurbishment fund contributions (keep the property maintained).
5. 70 LVR or higher lending from the banks (they don't like <50m2 units, but you can find lending if you look hard).
6. Reputable manager (I do prefer Unilodge and have had a good experience with them).
7. Located within walking distance to Unis.I didn't buy them for Capital Growth, I just want someone else to pay off my properties over time. You can own unlimited CF properties as long as the rental increase is in line with the rate rises. These supplement a balanced portfolio. Wishing everyone a good 2011.
Doug.
Hi Manoj (jack1234)…
My question with your theory is … How can you use the rental income to pay off your personal home loan – don't you have to declare that as income, and pay tax on that?
Interested in reading more about your theory!
Zac
ZacJ
I clearly said that you can claim the interest and quoted you the tax office determination earlier
tax office determination TD 2008/27
Click here to read the determinationwhen you claim interest – hopefully there will be no income (after expenses) and no tax to pay. Phone your tax agent and ask him why he is making you pay back the investment loan and not your own home loan
Infact after the home loan is paid you must contribute maximum into super and let your super fund borrow – if you need more information read below
http://www.trustdeed.com.au/tools_pct.asp?action=1&link=tools&page=pct
Manoj Abichandani
Tax AgentManoj, I have been reading your posts and have a few questions…
You have just stated that "hopefully there will be no income after expenses and therefore no tax to pay".
The whole point of the strategy this post is about, CF+ deals, is to make cashflow from our investments.
In fact, with the unltimate goal of replacing our job income and freeing us not to work.Minimising any income is then counterproductive to the whole idea.
If I make money from property investing, then I am happy to pay the (legally minimum) tax.
I want property that brings me real cashflow, not "virtual" savings.
I am not a tax advisor, and would appreciate further comments from you.
quickchick
:)” title=”>:)” class=”bbcode_smiley” />
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