Positive Cash Flow Properties – Real world examples

ten_burner – I would really like to know what you mean by ‘hick’ towns. From a quick google search of ‘hick’ I came across
“a person who lives in the country, regarded as being unintelligent or provincial”

I find this extremely offensive if this is what you are implying – I myself come from a town of less than 500 people and do not believe I am either of these things. I can also tell you that 99% that live in the country actually pay their rent on time and are excellent tenants and I wouldn’t hesitate to invest in such towns – from a small populated town I am receiving an 11% return and they are the best tenants I have had.

I am currently in the United States in Florida, there are still great opportunities here. However rather than just focus on cheap housing we look at high quality property such as apartment buildings and commercial buildings. You have to be careful what you buy but thats why it is important that you deal with the right people

ten_burner – having not heard of a hick town before and doing a google search the first thing that came up was “a person who lives in the country, regarded as being unintelligent or provincial”, perhaps it is common for the people you know to see it as someone from a regional town, however I would be careful what ‘slang’ you use, especially if there are other meanings to the word.

Also adding on to the risks you pointed out, I would not invest in a property without knowing these risks. The property I own is purely for positive cashflow, I do not expect any capital growth and I do not expect the rent to increase but that is not why I bought it.

Without this property I would have not been able to buy the last 3 properties I have purchased, all of which have been in capital growth areas.

This is a similar property to one I bought in my SMSF last year.

http://www.realestate.com.au/property-unit-qld-surfers+paradise-114193959
It may or not be cashflow positive depending on how much you want to put into it from an equity point of view.

Why did I personally like it?

Company title which meant low entry costs (yes there’s some grief too, but it was winner for me)
Small block, not high rise.
Tired – so upside potential

Mainly – I had more control than a bigger block with OC etc

Now this example is more the “after” to my “before” It has been reno’d with w new kitchen. I looked at this one last year but went with the cheaper “old and dingy” that was not in theat block but one very similar.

Just an example of what I’ve been looking at over the last 12 months.

Cheers,

Dwight

startofinish wrote:

These are the outgoings for a cheaper (Still 2×1) apartment in the same area to get an idea:

Approximate outgoings:
Council rates: $509pa
Water rates: $539pa
Body corp: $2,344pa
Total = $3,392pa

I made an allowance for expenses of 85*52= $4420pa …. which is probably a bit on the lower side, but keep in mind that I assumed the interest rate was 6% when bankwest offer a double deal home loan rate of 4.88% (at least they did when i checked last) which would bring the repayments down to $308 for the first three years, $35pw less than the number I used above.

$85/week for expenses?? What about insurances and vacancies?

Hi superandrew, I am loving reading your posts, I am new to this game and excited about getting started. Where do you choose your suburbs from?? I mean how of you know the ones where the positive cash flow properties are likely to be???!
Thanks

One thing to be very careful about is that interest rates in Australia are at record lows. They will not stay at that level forever. They are more likely to head to 7%. It might be another 12 months before rates start to move but the will move up.

Now if rates move by 2% how will that effect your numbers. I am also of the opinion that they will bbe a large over supply of apartments in inner city areas around Australia. I think it is highly likely that we will see prices of city apartments fall over the next few years to consider carefully.

I am taking more and more of m money to the United States

Hi Andrew

Your comments are not accurate. We can borrow 60% through commercial banks on commercial properties which can include apartment complexes.Also the loans are non recourse which this means is that the loan is based on the property rather than the person investing. So to me that means that the banks do have confidence. There is a view that in most parts of the United States the market has now bottomed.

In my own view, is that provided you are selective there are better opportunities in the United States than there are in Australia at present.

Deal of the week:

Purchase Price: $230,000
900sqm subdividable into 3 blocks
Rent: $440wk (duplex)

Gross yield of 9.95% – CF+ certainly does exist out there. :)