Positive cashflow

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From: Caroline Wilson


I have posed this question to the forum before - but I'm always interested in any more thoughts on the matter.

Is it just me or is it nearly impossible to have a cashflow positive real estate investment without having a 50% equity stake in the property?
 
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Reply: 1
From: GoAnna !


Hi Caroline

Of course it is possible to have cashflow positive properties even at 106% borrowings. It can be as simple as how creative you are with the property or the location you are buying in.

Rent it out by the room, furnish it, build a second dwelling on the land etc etc.

Buy way under market value.

Buy in a lower growth but high return area.

I am sure others have 100s more ways to find or create a cash flow positive property! When you believe they are out there you will see them everywhere.

GoAnna !
Why not go out on a limb, that's where all the fruit is. (Mark Twain)
 
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Reply: 1.1
From: Caroline Wilson


GoAnna,

Thanks for your input I appreciate it.

I'm an aussie currently o/seas do you have any research ideas on how I can determine market values and lower growth but high return areas?

Makes it hard doesn't it.

Thanks again
Caroline
 
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Reply: 1.1.1
From: Manny B


Howdy there,

the last property I purchased, I went for a property with potential that needed simple cosmetic work done to it. That meant I took 1 month off work, patched up the plastering, gave it a paint job, layed new vinyl (cheapest option for me at the time), etc.

I let it out for $200p/w then the agent mentioned that the tenants didn't have a lawn mower & I said I can mow their lawns for them for an extra $10 per week added to their rent, therefore renting it out for $210. I use the lawn mowing as an excuse to exercise (need it in my field of work), taking me around 40min every 4-5weeks & allows me to chat to the tenants & keep an eye on the premises & I can claim the mileage on tax for the days I drive down there & can depreciate a percentage of my new lawn-mower/whipper snipper on tax...

On another property the tenants didn't have a washing machine, fridge & dryer, so I bought them new ones (tax deductible as I do depreciate them) and upped their rent by $15pw. After the TAX benefits, the tenants paid off the whitegoods for me within the first year & I continue receiving the higher rent, making the property cashflow positive.

Cheers,

Manny.
 
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Reply: 1.1.2
From: GoAnna !


Yes caroline

The internet and telephone are my 2 main tools.

A question. Why do you want a cash positive property Caroline? How important is growth to you? How many ips do you currently own?

GoAnna !
Why not go out on a limb, that's where all the fruit is. (Mark Twain)
 
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Reply: 1.1.2.1
From: Caroline Wilson


GoAnna,

Positive cashflow is the most attractive element of real estate to me. I don't mind my day job but I'd like to buy assets that put money in my pocket today so I can choose whether I'll work tomorrow.

Capital appreciation is a bonus.

Cheers
Caroline
 
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Reply: 1.1.1.1
From: Caroline Wilson


Manny,

Good ideas thanks!

Caroline
 
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Reply: 1.1.1.2
From: GoAnna !


Go Manny! That's the kind of creativity that changes the flow from negative to positive.

A brilliant example of what I was referring to.

And even saving on a gym membership : )

GoAnna !
Why not go out on a limb, that's where all the fruit is. (Mark Twain)
 
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Reply: 1.1.2.1.1
From: Guy Wood


Hi Carolyn,
There was a really good article in the Australian Property Investor (www.api.com.au)a few months ago that covered +ve cashflow properties.
You'll often find them in country towns, low growth, except for in unusual circumstances such as the opening of a new industry, mine etc which brings an influx of new residents. You can find high levels of demand for good rental properties, & returns of 12-15%pa.
On the coast you may look at small blocks of flats. Older buildings are often well located, have good occupancy rates, but you may need to establish a good relationship with a local handyman. You'll find some of these properties with +ve cashflow & good capital gains.
 
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Reply: 1.1.1.2.1
From: Robert Forward


I remember The Wife talking about Gym membership with one of her properties over 12 months ago....

See it can help produce a positive income property.

Robert
 
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Reply: 1.1.2.1.1.1
From: Caroline Wilson


Guy,

Thanks - very informative.

Caroline
 
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