Cf+

where-to for CF+? I have stayed quite select in my local area which has done me well but now I have some cash am looking to CF+ properties.

Any good areas to be aware of please? Sash I am looking to you for help on this one ;)

Cheers all

Ben
 
Being a newbie in PI, does not know what exactly CF+ mean?

Does it mean

Rent minus expenses > Interest or
Rent minus expenses > Interest + Principal Payments ?


Thanks
 
pretty much holding costs being less than net rent. holding for PI is generally interest only loan + other costs.
 
Thanks Belu for the explanation.

My loan is interest only for the first 5 years. Do most people change loans after the initial interest-only period or do they start paying off the principals (which will then be reducing the cashflow)?
 
Hi Ben

Would you prefer to stay in Melbourne?....it might be hard to get Cash Flow positive stuff. But if there is a twist...i.e. cheap reno to increase rent then it maybe possible. It will become harder because th rates are going up.

I bought a house in Albury (NSW). It needed a reno ...and most people would have walked away from it. But it was just comestic....the bones were fine. I picked it up for 122.5K, did a 6.5K reno....and just landed a tenant who will pay 225pw.

This is about a 9.6% return on the original price and 8.8% on all costs (133K).

If you are prepared to pay about 600-900K you can get 10-11.5% return on houses in Port Hedland or Southhedland.

I tend to find something I can add value get a decent return which is slightly CF- and then over the next year or two get it to a positive level.

Hope this helps.

where-to for CF+? I have stayed quite select in my local area which has done me well but now I have some cash am looking to CF+ properties.

Any good areas to be aware of please? Sash I am looking to you for help on this one ;)

Cheers all

Ben
 
Last edited:
ForumiteThanks Belu for the explanation.

My loan is interest only for the first 5 years. Do most people change loans after the initial interest-free period or do they start paying off the principals (which will then be reducing the cashflow)?


Initial interest-free period? where is that and I'll switch lenders now! :) Most of us here never pay principal on the investment properties. After 5 years, you refinance.
 
ForumiteThanks Belu for the explanation.

My loan is interest only for the first 5 years. Do most people change loans after the initial interest-free period or do they start paying off the principals (which will then be reducing the cashflow)?


Initial interest-free period? where is that and I'll switch lenders now! :) Most of us here never pay principal on the investment properties. After 5 years, you refinance.
Mistake. It should be interest-only period.
 
Pt Pirie in SA and Broken Hill both have a lot of CF+ places.

Where I live is CF+ in a big way if you build your own and just slightly CF+ if you buy existing, but being a small town it seems everyone interstate glosses over the place.

If I sold my place it would be CF+ to the new owner but only if I can get rid of the HIA order.
 
Found some last week.

Bought a few for $45k rent $150pw, private sales however.
Val around $85k.

Also got a BIG deal which will rent for 20% yeild cf+ of $750pw after all expenses. (will post details in couple of weeks).

Basically on a normal loan you need around 8% yeild to be cf neutral in todays market.
 
Ours would be a Nathan special if we were planning on keeping it - bought $65k, spent $20k on it, would rent for $200pw.

There's one a few towns south of us that needs a LOT of work, for sale for around $70k, would also rent for around the $200 mark. Just keep your eyes peeled or hire Nathan to do it for you :D
 
Found some last week.

Bought a few for $45k rent $150pw, private sales however.
Val around $85k.

Also got a BIG deal which will rent for 20% yeild cf+ of $750pw after all expenses. (will post details in couple of weeks).

Basically on a normal loan you need around 8% yeild to be cf neutral in todays market.

hi nathan,

which suburbs do you target??? A house for 45K surely must be in the country???
 
Horsham has some cash flow positive properties.

A bit of work required on some of them and you can have a nice property quite cheap. That said its to far away for me to be looking there
 
.

If you are prepared to pay about 600-900K you can get 10-11.5% return on houses in Port Hedland or Southhedland.

I tend to find something I can add value get a decent return which is slightly CF- and then over the next year or two get it to a positive level.

Hope this helps.

try 18%....
 
4x2 house and land package - $625k

val - $850k min.

rent MIN $1650pw - up to $1870pw.

1650 x 52 = $85,800.

$85,800 ÷ $625,000 = 13.7%.

PLUS

instant CG from $625k cost to min $850k valuation = $225,000.

$850,000 x 0.8 (available capital) = $680,000

$680,000 - $625,000 = $55,000

$85,800 + $55,000 = $140,800

$140,800 ÷ $625,000 = 23.7%

MINUS

tax of approx 25% = 18%.

this is not taking into account depreciation, rates or SD.
 
I get you now....I was just basing it on the rent income and being conservative.

I know you can 10-11% easily.

Have you got a lot out there?....if so you can probably retire!;)



4x2 house and land package - $625k

val - $850k min.

rent MIN $1650pw - up to $1870pw.

1650 x 52 = $85,800.

$85,800 ÷ $625,000 = 13.7%.

PLUS

instant CG from $625k cost to min $850k valuation = $225,000.

$850,000 x 0.8 (available capital) = $680,000

$680,000 - $625,000 = $55,000

$85,800 + $55,000 = $140,800

$140,800 ÷ $625,000 = 23.7%

MINUS

tax of approx 25% = 18%.

this is not taking into account depreciation, rates or SD.
 
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