Can anybody achieve cashflow positive ?

[ericproperty]

Hi, guys

has anyone achieve cashflow positive in the current situation, with interest rate of 7% and higher in the coming months? In Sydney.

 

[alexlee]

Hi, guys

has anyone achieve cashflow positive in the current situation, with interest rate of 7% and higher in the coming months? In Sydney.

Put in a >50% deposit.

 

[ericproperty]

I have 2 IPs in Sydney. neither of them can achieve cashflow positive. What about you guys?

Just wondering, how much negative cashflow can you tolerate? and for how long in the sense of profitable property investment. Just good to discuss.

 

[bene313]

You can get close and perhaps turn it around to positive in a couple of years.

When it comes down to it, residential property is not really the investment to go for if you're looking for cashflow.

 

[Propertunity]

I have 2 IPs in Sydney. neither of them can achieve cashflow positive. What about you guys?

A few of mine have gone cf+ but this is after holding them for some time and seeing rent rises consistently over a period of many years.

Why do you think investors are so into building granny flats in their IPs at present? It can tip a cf- IP into cf+ within a few weeks.

Just wondering, how much negative cashflow can you tolerate?

This is going to be a function of people's income and it will obviously vary from person to person. Most people can only afford to hold 2 - 3 neg geared properties at a time.

Just good to discuss.

I think if you do a search, you'll find this has been discussed at length

 

[cadence]

as soon as mine starts to look like cf +ive, I would try to refinance ... so they go back to cf -ive ... but I probably won't be able to do that for a while coz of my debt level.

 

[JamesGG]

as soon as mine starts to look like cf +ive, I would try to refinance ... so they go back to cf -ive ... but I probably won't be able to do that for a while coz of my debt level.

Forgive me if this is a silly question, but, why do you prefer negative cashflow over making a profit...?

 

[skater]

Forgive me if this is a silly question, but, why do you prefer negative cashflow over making a profit...?

Ditto.......

 

[Kinnon Bell]

Yes.

Keep in mind this is in a regional city.

Purchase price was $100,000 with 95% LVR did a quick $6000 reno and now rents for $190 a week and value is around the $130,000 (very conservative).

 

[ashalim]

Maybe he's on the top tax bracket...

 

[ericproperty]

Hi, Proportunity

My understanding of PI is you either go with CF + or (perceived) CG. for people holding negative gearing IP is most likely for tax benifit, but you still pay for the negative geared IP (balance between interest and rent minus tax deduction), which could be considered as a compensation to CG. If you hold more than 3 negative geared IP, it really limits your ability to purchase more IP, which is not a good long term strategy.

In terms of CG, this is really the interesting point. any thoughts about Lalor Park NSW. It is close to Norwest business park and Blacktown, not far from Kellyville or Seven Hill or Castle Hill.

 

[alexlee]

Long term, rents do go up, while your loan doesn't. If you buy something for say 5% gross yield, it won't be THAT long before it becomes neutral. As one becomes neutral, you can buy more, etc.

Though it wasn't always like this. Used to be (and probably will be again) when you could buy cashflow neutral property in the capitals without granny flats.

 

[Propertunity]

My understanding of PI is you either go with CF + or (perceived) CG.

Or some compromise between both.

for people holding negative gearing IP is most likely for tax benifit, but you still pay for the negative geared IP (balance between interest and rent minus tax deduction), which could be considered as a compensation to CG.

Even if you are in the 50c in the $1 tax bracket, you have to 'lose' $1 to get back 50c in tax - which is fine if you are experiencing CG as compensation, as you say.

If you hold more than 3 negative geared IP, it really limits your ability to purchase more IP, which is not a good long term strategy.

You are forgetting that long term, every property will become cash flow +ve due to rental increases if you hang onto it long enough.

There are those that buy only neg geared, high CG property and when rents make them cash flow neutral to hold, they go out and buy more.

There are others that have a mix of cf+ and cf- IPs. There are some PIs that will do a sub-division to make $100K cash with which to service debt on cf -ve IPs....and so on.

In terms of CG, this is really the interesting point. any thoughts about Lalor Park NSW. It is close to Norwest business park and Blacktown, not far from Kellyville or Seven Hill or Castle Hill.

This is more Jacque Parker's (http://www.housesearchaustralia.com.au/)
neck of the woods. However, looking at the CG cart comparing all 5 suburbs, you'll see that Castle Hill & Kellyville have performed better and are showing good growth (athough at a higher price entry point). Lalor Park largely follows the CG of Seven Hills and Blacktown (but at a lower price entry point).

 

[alexlee]

neck of the woods. However, looking at the CG cart comparing all 5 suburbs, you'll see that Castle Hill & Kellyville have performed better and are showing good growth (athough at a higher price entry point). Lalor Park largely follows the CG of Seven Hills and Blacktown (but at a lower price entry point).

Wouldn't Castle Hill and Kellyville, especially Kellyville, be skewed by all the new stuff (more expensive) that's coming out?

 

[Propertunity]

Wouldn't Castle Hill and Kellyville, especially Kellyville, be skewed by all the new stuff (more expensive) that's coming out?

Yes, absolutely......but that has been happening for the last 15+ years now since I lived there in 1996 when Kellyville / Rouse Hill all started to become really developed.

 

[kathryn d]

You can get close and perhaps turn it around to positive in a couple of years.

When it comes down to it, residential property is not really the investment to go for if you're looking for cashflow.

I think there are properties everywhere, if you look hard enough, and keep an open mind of how you will market it, that are cf+ from day 1.

All of ours are in Canada, are all cf+, even at 100% financed.
We live off rents as our only means of income.
It can be done.

 

[wobbycarly]

Hi, guys

has anyone achieve cashflow positive in the current situation, with interest rate of 7% and higher in the coming months? In Sydney.

Yes.

Keep in mind this is in a regional city.

Purchase price was $100,000 with 95% LVR did a quick $6000 reno and now rents for $190 a week and value is around the $130,000 (very conservative).

Not quite apples and apples.

 

[Kinnon Bell]

Not quite apples and apples.

My bad. Didn't see that part

 

[wobbycarly]

My bad. Didn't see that part

Fair enough. Still a good effort!

 

[skater]

OK, I'll rise to the challenge.

Ex housie in West Sydney purchase for around $220k, add a G/F for another $80k. Rental income from house around $300pw & G/F $230-240pw.

No, it's not mine but can easily be done. Just need to think outside the box.