Can anybody achieve cashflow positive ?

[ericproperty]

To Skater

nice to see your reply with a bit of research, who do you refer to as "Epic" by the way.

It is good for people to shade light in this forum and stand up as a lead or a real life model. there is nothing wrong with this at all. Realistic figures and advice are equal important. Misleading information is useless and dangerous. I am doing my research of IP in western suburbs.

 

[Deltaberry]

Misleading information will financially obliterate you

 

[Wunderbar]

It will make you the Enron of Property Investment

 

[travelbug]

It is good for people to shade light in this forum and stand up as a lead or a real life model. there is nothing wrong with this at all. Realistic figures and advice are equal important. Misleading information is useless and dangerous. I am doing my research of IP in western suburbs.

So who is giving you misleading information that is useless and dangerous?

Do you mean Nathan? Id so read some of his posts here and also his website to see the deals he gets. And I actually I saw that house and it's as Nathan stated. Over 8% yield. No work needed. Sold way under market. If you are researching Sydney western suburbs reading Nathan's stuff will give you some valuable insight.

The OP asked "Can anybody achieve cashflow positive?" and people are giving examples that say YES but people keep on insisting it can't be done or that you have to buy in one horse towns with no CG.

 

[Nathan]

Western suburbs have these properties out there all the time, you cant just sit here on a forum and expect people to give you info they work years on finding the deal themselves.

I actually secured one today in western Sydney a house for $183,000 needs 10k reno reval @ $240,000 and rent $300-$320pw.

I offered on this place a long while ago and they have come to the table on it....

If you want to find them head to areas like wetsern sydney and south western sydney and look at proeprties, look at recent sales, and see what the really low sales prices are, know every house which has sold in the postcode of 15 suburbs and what houses are actually located on what street and then you will get a clearer picture and have knowledge and resources to make credible offers which have merit to be accepted. Its like leaving school and expecting a directors role at mc donalds but yet not even knowing how the process works or how the model works.

I shed this post in a positive light and hope that you find some insight into it.

Nathan.

 

[Nathan]

Hi, Nathan

It all sounds too good to be true. What are your principles of buy IP?

Three general rules only.

First is strong cashflow, cash isnt king, cashflow is.
Secondly is Below market value, from two angles as a risk minimisation and so you can pull your funds out and recycle your capital (expand faster)
Thirdly is it MUST have upside for growth.

If any one of these are missing, i wouldnt even look two hoots at the deal.

It MUST have all these perspectives, if not, I would leave it for the crows.

 

[Nathan]

Well people come here expecting all the answers. But if people knew a great deal that makes plenty of money, why would they tell you and everybody else?

I tell everyone

After I do the deal of course

Seriously there is so many properties in the marketplace out there that make money people just dont buy them because of opinions, and fear, and lack of knowledge and not understanding how each purchase will add to their portfolio and their bottom line. Each property should have a plan at purchase and if anyone doesnt have a plan for that specific property or for their puchasing plan, then they shouldnt buy that property or any property until they have a plan.

Just my two cents if its valued by others

 

[JT7]

The OP asked "Can anybody achieve cashflow positive?" and people are giving examples that say YES but people keep on insisting it can't be done or that you have to buy in one horse towns with no CG.

You can lead a horse to water but you can't make it drink! Or perhaps tall poppy syndrome...who knows? Nathan is following his own path and seems to be doing a fantastic job.

What possible benefit would Nathan get out of misleading anyone? It seems to me Nathan is following his dream just like others on this forum only in a positive and constructive way and sharing that dream with us. What else do you want from the bloke...the shirt of his back?

JT

 

[Mick C]

I tell everyone

After I do the deal of course

Seriously there is so many properties in the marketplace out there that make money people just dont buy them because of opinions, and fear, and lack of knowledge and not understanding how each purchase will add to their portfolio and their bottom line. Each property should have a plan at purchase and if anyone doesnt have a plan for that specific property or for their puchasing plan, then they shouldnt buy that property or any property until they have a plan.

Just my two cents if its valued by others

Can't agree anymore! well said.

It's like buying a car and not knowing how to drive it.
If you buy a place, know what your going to do with it...when to sell, how much renovation ( if any) your going to spend, are you going to cap on the growth in 2, 3 ,4 ? years...

Regards
Michael

 

[travelbug]

You can lead a horse to water but you can't make it drink! Or perhaps tall poppy syndrome...who knows? Nathan is following his own path and seems to be doing a fantastic job.

What possible benefit would Nathan get out of misleading anyone? It seems to me Nathan is following his dream just like others on this forum only in a positive and constructive way and sharing that dream with us. What else do you want from the bloke...the shirt of his back?

JT

So true. Nathan (and many others on this forum) are so giving of their time, experience and expertise.

I have learned so much from this forum and have made some great connections. It's been invaluable to me actually.

Newbys- read everything then decide which is the way to go for YOU. My mistake at the beginning was reading what everyone did and trying to do it all at once. As Nathan said, you can't just jump into management. Start with what you have and build on that. You learn as you go.

Everyday I'm reading posts where new investors want someone to find them a positive cashflow property with high CG. Yeah we all want that.
Read and get out there and look. It's not just about WHERE it's about WHAT. The answer is not going to be go to ## suburb and you'll get it all (well- except if you can go back to 1999 in Sydney).

Good luck everyone.

 

[Mom]

I don't know how people calculate their cashflow to determine if their property is positive or negative.

I calculate them based on all the money I spend in buying and renovating the property so if my purchase price is say $160K and spent another $15K on fees, transfer duty and cosmetic renovation, LMI etc my total purchase price is then $175K.

I total my expense like strata fee, council rate, water, insurance, management fees etc and take them out from total rent, so for a rent that say $300per week total rent per year is $15600 and then take out say $5000 per year for the expense, now that's a clear 6% return to pay for PART of todays interest which is in the region of 7%.

I personally would like my return to be 6% to 7% pa in Sydney metro and 12% up for regional.

Even if I put up 30% of my own money, I still will not call it as positive cashflow if it doesn't satisfies the above, who's is going to to compensate me for my opportunity loss for my 30% deposit or $52.5K, I'd better just let it sit in my offsett or redraw offsetting 6-7.22% p/a on my own principle place of residence mortgage. Well, it will be different I guess if you are already PPOR mortgage free.

 

[Deltaberry]

If after paying your expenses + interest, the remaining cashflow does not give you a 7%+ return on equity, then forget it. And of course as mentioned, the place better have the best CG potential too so none of this whoop whoop random place.

 

[travelbug]

I don't know how people calculate their cashflow to determine if their property is positive or negative.

I calculate them based on all the money I spend in buying and renovating the property so if my purchase price is say $160K and spent another $15K on fees, transfer duty and cosmetic renovation, LMI etc my total purchase price is then $175K.

I total my expense like strata fee, council rate, water, insurance, management fees etc and take them out from total rent, so for a rent that say $300per week total rent per year is $15600 and then take out say $5000 per year for the expense, now that's a clear 6% return to pay for PART of todays interest which is in the region of 7%.

I personally would like my return to be 6% to 7% pa in Sydney metro and 12% up for regional.

Even if I put up 30% of my own money, I still will not call it as positive cashflow if it doesn't satisfies the above, who's is going to to compensate me for my opportunity loss for my 30% deposit or $52.5K, I'd better just let it sit in my offsett or redraw offsetting 6-7.22% p/a on my own principle place of residence mortgage. Well, it will be different I guess if you are already PPOR mortgage free.

I do it this way too. I think people that say they paid 30% deposit and calculate interest on the 70% only and say it's cash flow positive are fooling themselves. If I did this ALL mine would be WAY over CF+ as my total LVR is less than 60%.

 

[Deltaberry]

Absolutely. People who say they are CF+, but have 50% gearing, are talking cr@p and add nothing to the discussion. You might as well have 0% gearing. I'm sure you'd be even more CF+.

What's important is that the net cashflow into your pocket (ie rent less interest less all other expenses) can generate a 7%+ return on the CASH you put in. Because if it doesn't, you might a well put the CASH in a term deposit and generate 6.5% return risk free.

In short if you're not achieving 7% ROE, it's a pretty ordinary investment. If you're generating less than 4% ROE it's a dud as far as cashflows go.

 

[Belle]

Wow just browsing Nathan’s website. Very inspirational!

Can anyone tell me which Melbourne suburbs would be comparable to Sydney’s west?

 

[kathryn d]

Absolutely. People who say they are CF+, but have 50% gearing, are talking cr@p and add nothing to the discussion. You might as well have 0% gearing. I'm sure you'd be even more CF+.

What's important is that the net cashflow into your pocket (ie rent less interest less all other expenses) can generate a 7%+ return on the CASH you put in. Because if it doesn't, you might a well put the CASH in a term deposit and generate 6.5% return risk free.

In short if you're not achieving 7% ROE, it's a pretty ordinary investment. If you're generating less than 4% ROE it's a dud as far as cashflows go.

I disagree.
Many times a property will start out as very small CF.
It certainly doesn't need to take long for this to turn around.
If the property value increases in a short time, of course the gearing will go down, unless you keep accessing the equity.That doesn't make what anyone says "cr@p". Whether an investor decides to keep accessing their equity is a personal choice.
We have lots of properties that are 0-50% geared.

 

[Ridin-High]

Misleading information will financially obliterate you

In one of the books im reading it says that bad information is as dangerous as all the other enemies of investors combine

 

[ericproperty]

To Mom and Ridin-High

It is so nice to see wise people post comments. Thanks Mom and Ridin-High, I reckon you two people will achieve a lot in property investment, wisdom and critical thinking will go a long way.

 

[jaycee]

To Mom and Ridin-High

It is so nice to see wise people post comments. Thanks Mom and Ridin-High, I reckon you two people will achieve a lot in property investment, wisdom and critical thinking will go a long way.

eric,

maybe it's in the detail...

casfhlow positive, easy to find for newbie investors, in the middle of the cbd/pristine suburbs, with certain capital gain, i.e. what you're used to hearing about , but just with heaps more rent coming in..... probably not..

cashflow positive, through learning what options are out there, and then looking for those types of opportunities specifically..... seems to bloody be, cause it's defintiley being done..

easy ? hell no... until you know what you're doing... but when someone knows what thye're doing, they always make it look bloody easy... take my favourite musicians who both inpsire & depress me at the same time with their playing skills, which make me feel both in awe of them and annoyed at them for being able to do it while I can't, all at the same time.

Nathan's a good guy. He's shared a lot on here & no one's been annoyed at him.. have alook around on the fourm, I don't think we're exactly known for taking crap lying down

 

[ericproperty]

Hi, jaycee

I really appreciate critical and analytical thinking, because these are fundamental skills we need to possess before diving into property investment, wrong decisions could cause life time disasters. I am not saying there is anything wrong with Nathan, do not get me wrong. I appreciate people can set real life example for us. Being through some motivational seminar, I have suspicious attitude toward something sounds too good to be true.

nice to discuss ideas and thoughts here. very helpful.