Feedback with how I find cashflow positive property

BayView · 6th Feb, 2014

PT_Bear said:
Don't kid yourself though, 5.2% rental yield is not even close to cash flow positive when you consider all the holding costs (property management, maintenance, rates, body corp, etc).

But real estate agents reckon 5% is a fabulous yield....

Ryan Cortez · 7th Feb, 2014

CJay said:
You want to make sure that besides having a strong yield, the CG prospects are there to keep up/exceed inflation.

Key things I look for are:

Positive demographic changes - slummy areas becoming nicer over time.

Higher than avg. population growth - creates more demand and higher prices.

Private and govt investment infrastructure and development.

Development potential/renovation potential is desirable.

Thanks for sharing. I'll be sure to look at growth drivers alongside CG and not just the hard numbers

Corey Batt · 7th Feb, 2014

Ryan Cortez said:
Thanks for sharing. I'll be sure to look at growth drivers alongside CG and not just the hard numbers

The main reason is you don't want a 10% yield with a declining capital base, otherwise your total return is falling and the long term prospects of maintaining or growing your rental return is diminished.

Good luck.

rohan22no · 11th Feb, 2014

vaughan said:
Similar 4-bedders to this place rent for $350 to $400 per week, so this is +cf right from day 1.
http://www.realestate.com.au/property-house-nsw-goulburn-115354171

The property below just sold for $172,000 (yes, above the asking price) and although needs some work, will rent for around $300 per week. If you can renovate to budget this will be a good deal and could probably be flipped for a profit.
http://www.realestate.com.au/property-house-nsw-goulburn-115905751

If you are serious about making money in IP, get interested in reno and development. You can see why: 4 bedroom places get (roughly) $400 per week, which is $50 to $100 a week more than 3 bedders get which is (roughly) $300 a week. 2 bedroom places only get $200 to $250 per week -- I don't look at 2 bedders other than to see whether there is development opportunity. Adding another bedroom to a house GREATLY increases its value and rental return, as long as another room (like lounge) hasn't been sacrificed in the process.

Hey Vaughan,
Are you from Goulburn? Those rental figures seem very optimistic...I lived there all through high school and a bit beyond that, parents still live there and I visit regularly and have kept a reasonable interest in the real estate there.

Anyway That 4bed/1bath on Hume street is definitely a lower class area (lots of ex-govvies etc). Not necessarily a bad thing but those rents you said strike me as very high. Dont want to rain on the parade here, I certainly hope you're right! "Intuitively" I would have thought that place would rent for like $320/wk max...but again...happy and hope to be proven wrong

Cheers

vaughan · 11th Feb, 2014

rohan22no said:
Are you from Goulburn? Those rental figures seem very optimistic...

vaughan · 11th Feb, 2014

rohan22no said:
Anyway That 4bed/1bath on Hume street is definitely a lower class area (lots of ex-govvies etc).

That's exactly 2770: ex-govvies. The trick is the "ex" part.

Off topic: by chance I watch an episode of Housos on SBS last night. Could have been a documentary.

rohan22no · 12th Feb, 2014

I gave the agent a ring today re: 27 Hume St.

Currently rented for $280 on a week to week basis. With new paint and general sprucing up the agent said "might be able to get in the 300's".

Truly Exotic · 12th Feb, 2014

I get $270 per week for my renovated 3 bdr in goulburn in the shabby areas, and that was a bit lucky,

renovated on hume, you'd be hard pushing $300 p/week

not sure about 4 bdr as there arent many, but my guess is $10-$15 per week more

coastal · 15th Feb, 2014

does anyone find by allowing pets -inside and outside the house increase rents and stay of tennants?

impala67 · 15th Feb, 2014

coastal said:
does anyone find by allowing pets -inside and outside the house increase rents and stay of tennants?

I think it is case by case...I have a smaller unit where I allowed pets (cat)...same tenants for 2 years+ and the rent is in the higher bracket for the type in the area. I have another unit that the lease is expiring on in a few weeks & am allowing small pets. Enquiries have been made to the agent already about pets. The managing agent said she'll be adding pet clauses and will consider additional bond. That one is in the higher rent bracket for the type in the area also. Probably the other SS'ers will have more experience with this, but in my limited experience I think it does.

In general no matter the location I think if you allow yourself more options, you will get better returns.

coastal · 16th Feb, 2014

What about big pets?

impala67 · 16th Feb, 2014

coastal said:
What about big pets?

No big pets for the units. House is fine, only if you have the room.

Corey Batt · 16th Feb, 2014

I allow pets, as the types of property i own are not ones that you'd be fussy with the backyards. You will get double the tenant enquiries, longer term tenancies and a marginally higher rent.

If you say no pets, they'll have them anyway but just take them for a walk/keep them at a relatives during the inspection. Better to regulate and profit than reject and suffer the negatives.

impala67 · 16th Feb, 2014

CJay said:
...If you say no pets, they'll have them anyway but just take them for a walk/keep them at a relatives during the open...

sneaky tenants.

Feedback with how I find cashflow positive property

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