Can anybody achieve cashflow positive ?

[ericproperty]

would there be any places in Sydney can achieve the 9%, considering reasonable CG as well.

 

[Wunderbar]

Rubbish.

7% return, before paying other expenses such as council rates and property mgmt fees, can be found in many places. Look at the data tables with rental returns in the back of a copy of Australian Property Investor magazine for an idea on the areas where these can be found.

You will probably need maybe 9% to start seeing positive flow though after expenses, but will depend on depreciation etc.

I don't rely on general, oversimplified property magazines to gauge yields. I am telling you there is no such thing as 7% yield unless you rent out a house on a room-by-room basis. This is assuming you buy the property today.

 

[sanj]

I don't rely on general, oversimplified property magazines to gauge yields. I am telling you there is no such thing as 7% yield unless you rent out a house on a room-by-room basis. This is assuming you buy the property today.

that is a very big call to make

 

[kathryn d]

I'm terrible at figuring out returns...so hoping someone could help me..or show me the furmula.

I have the opportunity to purchase a 3 bedroom home for $2,900 (twenty nine hundred) and for about $8000 it could be quite livable.

After renovation I would be able to rent for $650 month ($7800 pa)
Expenses would be $2200 year
Let's say it is 100% financed at 5%

 

[BuildingBlocks]

I don't rely on general, oversimplified property magazines to gauge yields. I am telling you there is no such thing as 7% yield unless you rent out a house on a room-by-room basis. This is assuming you buy the property today.

I would agree with you, but then we would both be wrong.

 

[sanj]

I'm terrible at figuring out returns...so hoping someone could help me..or show me the furmula.

I have the opportunity to purchase a 3 bedroom home for $2,900 (twenty nine hundred) and for about $8000 it could be quite livable.

After renovation I would be able to rent for $650 month ($7800 pa)
Expenses would be $2200 year
Let's say it is 100% financed at 5%

(Rent - costs)/ purchase price

Rent - 650x12= $7800
Interest - (2900+8000)x5% = $545
Puirchase price = $10900


[(7800-545-2200)/10900]x100 = 46.38%

That's an incredible figure, is that in any way typical for properties in the area?

 

[kathryn d]

(Rent - costs)/ purchase price

Rent - 650x12= $7800
Interest - (2900+8000)x5% = $545
Puirchase price = $10900


[(7800-545-2200)/10900]x100 = 46.38%

That's an incredible figure, is that in any way typical for properties in the area?

Those opportunities are there if you search them out, and willing to renovate a bit. This is a low price and I'm just waiting for May to look at it in person.If it's gone, there will be another deal.

This wouldn't be our first property at this price...or return.

 

[BuildingBlocks]

I'm terrible at figuring out returns...so hoping someone could help me..or show me the furmula.

I have the opportunity to purchase a 3 bedroom home for $2,900 (twenty nine hundred) and for about $8000 it could be quite livable.

After renovation I would be able to rent for $650 month ($7800 pa)
Expenses would be $2200 year
Let's say it is 100% financed at 5%

I think this is what you are asking for:

1) Rent: Your annual rent will be $7800 ($650 x 12)

2) Gross rent return: Annual rent ($7800) as a percentage of buying costs ($10,900 assuming that $2900 + 8000 reno is needed) = 71.55% ($7,800 rent divided by $10,900 x100)

3) Mortgage repayments (assuming interest only): $10,900 x 0.05 = $545/year.

4) Cashflow: $7800 rent - $545 mortgage (assuming rent wasn't in your expenses) - $2200 expenses = $5055.

edit: Got beaten to it!

 

[BuildingBlocks]

Those opportunities are there if you search them out, and willing to renovate a bit. This is a low price and I'm just waiting for May to look at it in person.If it's gone, there will be another deal.

This wouldn't be our first property at this price...or return.

However just to clarify, this is in Canadia right?

 

[kathryn d]

However just to clarify, this is in Canadia right?

Yes, it is...but the returns would still be the same for us.
This is why we have decided not to invest in Australia..we can make money from day 1 there.

 

[BuildingBlocks]

I don't rely on general, oversimplified property magazines to gauge yields. I am telling you there is no such thing as 7% yield unless you rent out a house on a room-by-room basis. This is assuming you buy the property today.

Just to remove any doubt:

http://www.realestate.com.au/property-villa-wa-south+hedland-107172919

$870,000 renting for $1750/wk. You can buy it today if you wish, the agents number is on the ad

I'm not saying it is a good deal though.

 

[BuildingBlocks]

Yes, it is...but the returns would still be the same for us.

Not disagreeing, the calculations are identical

 

[Wunderbar]

If you invest in that type of thing it ceases to be a 'rental return' but it's more like a business. You have to distinguish

 

[Aaron Sice]

that is a very big call to make

i'm sure we could show him a thing or two, eh?

 

[jaycee]

Those opportunities are there if you search them out, and willing to renovate a bit. This is a low price and I'm just waiting for May to look at it in person.If it's gone, there will be another deal.

This wouldn't be our first property at this price...or return.

in Canada !

 

[jaycee]

Yes, it is...but the returns would still be the same for us.
This is why we have decided not to invest in Australia..we can make money from day 1 there.

These same returns as in Canada are probably not available in Australia (or at least easily as in Canada (without implying what you do is easy ?)

Is that what you're saying ? Which is why you probalby won't rent here ?

Reason I ask is, besides yourself and Bob, the rest of us are generally usually probably almost always talking about investment propeorties available in Australia and their returns

 

[Icarus]

This one's 8% (not including rates or management) - but would sneak into the 7% bracket when these extra costs are included.. http://www.realestate.com.au/property-unit-qld-emerald-107131799

Yes, I know - another mining/regional town, but this one hasn't the associated llarge buy-in cost of the PH place listed earlier. Plenty of scope to improve value on this place too. This would probably be one of the cheapest 2br units on the market in town @ $200pw.

 

[BuildingBlocks]

If you invest in that type of thing it ceases to be a 'rental return' but it's more like a business. You have to distinguish

Umm ...right

 

[ericproperty]

Hi guys

let's focus on Australian Market rather than overseas unless you wish to invest overseas. let's focus in Sydney.

I am looking at St Marys and Blacktown area. You could by a 3bedroom house with 600m2 land for $220,000, rent would be $300-320/week. not sure about capital gain. Blacktown area $320,000. rent $300-350.

any thoughts?

 

[RLeon]

i just purchased in Warrnambool (Victorian coastal) $415,000 and returning $600 a week rent. Not sure how the figures stack up but i am happy with that return. 100m to main street, 800m to the beach, 200m to school and 5 years old.