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From: Mike .
Interesting read
From: The Wife
Date: 7/21/00
Time: 9:24:55 PM
Howdy All!, saw this posted elsewhere, thought I might bring it back over here for all to look at, if theres some sorta copyright, none of you know me ok!
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Hi there...
I think you have the ratio worked out OK, but let's work through one to be sure!
Let's say I'm interested in a house that rents for $140 per week, so the max I'm willing to pay is $70,000.
What we do is flip them (houses), selling them at 20% above our cost plus if they (next buyer) get finance from us it's +2% on our cost of finance.
We sell the house to them for $84,000 and finance it back to them at our rate +2%. We need a 20% deposit (or $14,000) and we receive back 20% deposit ($16,800). Their repayments are based on $67,200, ours is based on $56,000. This, together with the 2% differential provides a +ve cash return for the period of the loan.
Some houses are straight rentals too. We picked up one the other week for $42,000 which rents for $140 per week.
The average house provides a positive net cash flow of about $50 per week (allowing for all expenses and a vacancy factor of four weeks a year).
I was working on a rough rule of thumb that has worked for us. It's a good way to eliminate a lot of properties that won't meet the criteria straight away.
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Howdy Again, Of course good common sense is needed, you would want to buy something brick, something thats not going to be resumed by the local government for whatever reason ( unless they pay well), something that has been 'okay' maintained, near transport...you know, the usuall stuff, and what about Lease/options??...i think they are pretty good. Its good to have some long term investments, but i want some money now as well, to do other things with, besides, an income producing property is such a bonus , your borrowing power just JUMPS!
Interesting read
From: The Wife
Date: 7/21/00
Time: 9:24:55 PM
Howdy All!, saw this posted elsewhere, thought I might bring it back over here for all to look at, if theres some sorta copyright, none of you know me ok!
....................................................................................
Hi there...
I think you have the ratio worked out OK, but let's work through one to be sure!
Let's say I'm interested in a house that rents for $140 per week, so the max I'm willing to pay is $70,000.
What we do is flip them (houses), selling them at 20% above our cost plus if they (next buyer) get finance from us it's +2% on our cost of finance.
We sell the house to them for $84,000 and finance it back to them at our rate +2%. We need a 20% deposit (or $14,000) and we receive back 20% deposit ($16,800). Their repayments are based on $67,200, ours is based on $56,000. This, together with the 2% differential provides a +ve cash return for the period of the loan.
Some houses are straight rentals too. We picked up one the other week for $42,000 which rents for $140 per week.
The average house provides a positive net cash flow of about $50 per week (allowing for all expenses and a vacancy factor of four weeks a year).
I was working on a rough rule of thumb that has worked for us. It's a good way to eliminate a lot of properties that won't meet the criteria straight away.
......................................................................................
Howdy Again, Of course good common sense is needed, you would want to buy something brick, something thats not going to be resumed by the local government for whatever reason ( unless they pay well), something that has been 'okay' maintained, near transport...you know, the usuall stuff, and what about Lease/options??...i think they are pretty good. Its good to have some long term investments, but i want some money now as well, to do other things with, besides, an income producing property is such a bonus , your borrowing power just JUMPS!
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