I think we have finally gone CF Neutral

A

Angel

OMG, after three and a half years of being negative big time, I just looked over The Budget. After taking tax refunds into consideration, it looks like we have hit that magic place which has been alluding us in South East Qld ever since we took the plunge and became property investors.

Party Central here tonight!
 
Angel said:
OMG, after three and a half years of being negative big time, I just looked over The Budget. After taking tax refunds into consideration, it looks like we have hit that magic place which has been alluding us in South East Qld ever since we took the plunge and became property investors.

Party Central here tonight!
Click to expand...

Well done. But to rain on your parade - if IRs bump up a little I doubt you will be. (assuming you borrow to invest)
 
A very happy milestone indeed - congratulations Angel :)

Time to start smashing down debt. Hike the rent. Direct surplus income into offsets. Onwards and upwards :D
 
Well done. Time to reduce more and move into positive territory so that even if IR go up, you will be still neutral or positive!
 
Ed Barton said:
Well done. But to rain on your parade - if IRs bump up a little I doubt you will be. (assuming you borrow to invest)
Click to expand...

Ahhh someone already added the rain. I was going to mention the same thing.

However - hopefully any rise in rates comes with a rise in rents :)

Well done!

Cheers

Jamie
 
It's a great feeling isn't it. I think ours might also have just ticked over to cash flow positive...although it's taken more like eight years for us! Every year we lost money I questioned if we were doing the right thing. It now makes it feel worth while.
 
Hi Wiley
Yeah, I want to get something in the northern suburbs (familiarity). Gotta toss up, a month in Italy or another house.....I'll see after I send some valuations to my broker.
 
Angel said:
Hi Ned. We didn't start with any cash deposit. Does anyone measure this stuff anyway?
Click to expand...

Well, I calculate in various ways. (Just a few IPs, so I can use various ways :D)

(Deducting the below calculations from rent to get get the cashflow position)

1. The actual repayments we make - (rates+insurance) : The real cashflow position
2. 7% interest on actual loan amount - (rates+insurance) : Whether we can manage the portfolio if the interest rates go up to 7%
3. The total value of the properties X desired rate of return - (rates+insurance) : This gives the return of the investment.

For me the amount of deposit or the renovation costs are irrelevant. Those are sunk costs; we cannot change them. But I do calculate how much equity I have in each property and whether selling that property to use that equity elsewhere is more profitable.
 
Angel said:
Hi Ned. We didn't start with any cash deposit. Does anyone measure this stuff anyway?
Click to expand...

A lot of people don't but think about it. You buy a $500k property with an LVR of 80% which means you have to find $100k deposit. If you have these funds locked up in a property you are losing the interest on it.

$100k in a long term deposit could earn about 4% so it is costing you $4k to have that money tied up.

If you managed to start with a 100% mortgage that's a different matter.
 
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