cash flow positive real estate

It is getting very difficult to find cash flow positive property in Australia, however note I am saying difficult, not impossible. There is still plenty of oppurtunities out there. The strategies that Steve outlines in his books are probably as good as any when you are hoping for a ‘formula’ for success.

In my opinion, the better oppurtunities I have seen for cash flow positive property are typically out in the country areas, not completely remote properties, but in small towns of around 10,000 – 30,000 or so, there are good oppurtunities for properties to be cash flow positive, or neutral.

Always talk to a few real estate agents in the areas, the ones out in the country seem to do the job for pleasure rather than money, so they seem to be typically more honest than city real estate agents. So just ask them the potential a certain property has.

Just doing a quick look on the internet now, this one the first one I really saw –

http://www.realestate.com.au/property-house-nsw-taree-110294369

Nice property in Taree NSW, $125,000. Potentially can be leased for $220 per week. With a 20% deposit, the principal will be $100,000. Interest only repayments at 6% interest gives $6,000 a year in interest. The rent gives $11,400. Taking away fees, maintenance, rates etc, I would say you would be slightly positively geared here, or at the very worst neutrally geared.

That is my advice when trying to find positive geared property, everyone else I am sure has their own ideas and can probably get a whole lot more creative than me.

Hi there

Welcome aboard.

For a quick calculation, I jot down and allocate costs to the following expenses:

Interest repayment on the loan p.a

Property management fees p.a

Insurance p.a

Rates p.a

Land tax p.a

Maintenance p.a

Total costs p.a = xx

Total rent p.a = yy

Total rent (yy) minus total costs (xx) = cash flow position of IP

This doesn't cover absolutely everything (I haven't included depreciation) but it gives you a quick idea of how the numbers will look.

Here's a blog entry on the basics of negative/positive gearing that you might find useful.

Cheers

Jamie

i just got steves books a couple of weeks ago. I'd suggest folowoing the strategies in there – it's pretty straight forward. Good luck!