Positive Geared Units

It seems it would be difficult to find a unit that would bring in enough rent minus all the strata and council fees to make it positive at least in the price range I'm looking at.

For example let's say I buy a unit for $175,000 and the weekly rent is $200 but strata & council costs combined are $50 per week then it would only be bringing in $150 per week. At first glance a property for that price with the rent looks good but until you realize the costs of those fees. Then you have other costs including paying the agent to let the property so it would be even less than $150 per week.

So I guess for a property at $175,000 I would need to have rental income of about $250 per week to make it positive?
 
It seems it would be difficult to find a unit that would bring in enough rent minus all the strata and council fees to make it positive at least in the price range I'm looking at.

For example let's say I buy a unit for $175,000 and the weekly rent is $200 but strata & council costs combined are $50 per week then it would only be bringing in $150 per week. At first glance a property for that price with the rent looks good but until you realize the costs of those fees. Then you have other costs including paying the agent to let the property so it would be even less than $150 per week.

So I guess for a property at $175,000 I would need to have rental income of about $250 per week to make it positive?

As Rolf said.

If you put in half the purchase price as cash it'd most likely be pos.
 
It seems it would be difficult to find a unit that would bring in enough rent minus all the strata and council fees to make it positive at least in the price range I'm looking at.

For example let's say I buy a unit for $175,000 and the weekly rent is $200 but strata & council costs combined are $50 per week then it would only be bringing in $150 per week. At first glance a property for that price with the rent looks good but until you realize the costs of those fees. Then you have other costs including paying the agent to let the property so it would be even less than $150 per week.

So I guess for a property at $175,000 I would need to have rental income of about $250 per week to make it positive?

Yep, you are right, it would be difficult. Getting a +ively geared property off the bat is never easy. Especially in Sydney.

You could buy under market value because it needed a reno (lots of people don't like work). Give it a quick reno then you have extra equity and a better rent.

At $175K and $200 rent that's under 6% yield so not wonderful. Keep looking but don't hold your breath for a positive property. Don't forget you'll get (depending on your tax bracket and the property) depreciation as well.

Good luck.
 
mosoon, depending on the location you may be able to rent out the unit fully furnished.

1) You don't need to spend a lot of money on the furnishings (cheap and robust)
2) furnishings can be depreciated while not reducing your cost base for CGT



I'm guessing a unit for $175k is a 1bed?? I think you'll find that the cheaper 1bed units will have the return reduced (from strata & rates) as a % more so than the pricier 2bed units.
 
In sydney I pick them up all the time.

Are there if you look in the right places.

$175k, rent $280pw.

There out there. I bout a 3 bed villa the other day for someone that will rent for $250 easy.
 
In sydney I pick them up all the time.
They are there if you look in the right places.
They're out there.

Yes, I agree with Nathan. They are out there. We just purchased 3 properties for clients recently with rent returns of 7%+. If mortgages cost 5% and running costs are 1.5%, then these properties are 0.5% cash flow positive if you borrow ALL the funds.....and that is before depreciation & tax!
 
does this occur in victoria?

assuming non regional, non serviced apartments,

does this occur in houses at all, or general in 1 bedder apartments in metro areas?
 
It happens in all cities.

You just need to have a loose plan on your criteria. I have seen parts of VIC with cf neutral of late. Like 2 bed unit/villa 20km from CBD $160k buy, rent $250pw.
 
great feedback thanks, I won't go into exact details but interest rate is variable let's say between 5.1 & 5.5 as they will go up soon by the looks. I will be looking at only a small deposit and equity so it will be a large loan at around 90% and I will be buying two properties at around $175,000 each. Maybe one in Sydney and one in Newcastle area, probably one house and one unit but if I can't find anything in this price range I will just buy one house for around 350k. They will be IP's and I already have a PPOR. I also would prefer to find something to renovate as well.

For $175,000 in my situation, what rental return should I be looking at to cover strata, council, letting fees etc and to still have a positive gearing?

I had found a few units in Sydney that would be positive but then I herd about requiring the 50sm so it's a little harder now.
 
depends.... The somersoft software could work it out for you.... Basically its cost, ie all interest and holding costs minus income, perhaps including tax dedcutions on depreciation etc.
So there are many variables, for instance one high income persons cash positive property may be a lower income persons cashflow negative property, because of the diferent tax rates....
 
I'm on a medium self employed income but I'm only looking for general rough figures and my MB would work all this out for me in a second if I ask her but I'm just interested to see what members think about all this. I'm guessing I would need to find something that would rent out for at least $250 with strata and council rates of $50 combined?

I have found 1bdr units just under 50sm plus carport that look good but then I'm worried about it been too small.
 
Yeh you can get $250pw, for $175k for townhouses or units being 2 beds + in sydney.

I just purchased one today for $169k, rent $260pw 2 bed.
 
Yeh you can get $250pw, for $175k for townhouses or units being 2 beds + in sydney.

I just purchased one today for $169k, rent $260pw 2 bed.


that's great, well done and it gives me some hope. ;)

As for my earlier questions, I have just discussed all this with my MB who has given me all the info I need, thanks everyone.
 
Goodluck.

Buying stuff with stong cashflow, gives opportunity to purchase more with keeping serviceability in tact.
 
I don't agree as this effectively implies that there is no cost for the cash that you use as the down payment. There is always a cost at the least an opportunity cost.

Cheers

Of course there is; there's an opportunity cost for everything. The opportunity cost of me lolling around on the couch watching the toobe is a six-pack gut.

But that wasn't the question raised.

It's a simple formula; more cash injected into purchase equals less loan required than all outgoing expenses = CFP.
 
In sydney I pick them up all the time.

Are there if you look in the right places.

$175k, rent $280pw.

There out there. I bout a 3 bed villa the other day for someone that will rent for $250 easy.

And this one.

When was the last time something cost less than $200k in Sydney?

You need to qualify what constitutes "Sydney" I think.
 
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