Posivite cash flow?

Y

YPG

Hey everyone,

Does it worry anyone else that the majority of properties that are cash flow positive are in a regional place?

I've always thought my strategy would be to buy with 15k of major cities?

But obviously a few cash flow positive properties can balance out the overall port folio.

However, I am a bit skeptical about regional places but I guess it all comes down to due diligence whether or not I believe the town will grow in the long run.

Who here is sold/not sold on cash flow positive properties in regional towns?
 
I always think for property you have to be relatively nearby to keep an eye on it. It's your money, after all, so you have to always be within driving distance to ensure your investment is not compromised in any way.
 
I'd be more concerned that city properties are so likely to be *negative* cashflow.

I remember when I was first looking at houses (late '90s), the rule of thumb seemed to be that the rent was double the house value. Ie, if the house was $70,000 it would rent for $140 a week. And this was Adelaide metro within 10km of the CBD.

Haven't times changed ...
 
YPG said:
Hey everyone,

Does it worry anyone else that the majority of properties that are cash flow positive are in a regional place?

I've always thought my strategy would be to buy with 15k of major cities?

But obviously a few cash flow positive properties can balance out the overall port folio.

However, I am a bit skeptical about regional places but I guess it all comes down to due diligence whether or not I believe the town will grow in the long run.

Who here is sold/not sold on cash flow positive properties in regional towns?
Click to expand...

I've both made money and lost some with regional areas. Am currently holding something in both Regional NSW and in Regional VIC.

I've found that you need to really research an area before diving in. Being out of area you may not have as much knowledge as a local, so try to learn as much as you can, not only about the area, but try to get a feel on the agents too. Afterall, they will be the ones doing the managing of your property.

The only REAL problem I've encountered is with Agents. One area that I have a few properties has a handful of Agents. They all suck, but in varying degrees. At one stage I had several properties that were vacant and according to the Agent there was no demand. After having these properties vacant for some time, they told me the reason they were not renting was because the properties were in a bad state of repair.

Ummm.....OK, so why wasn't I told of this earlier and why wasn't the money taken from the bond? Many reasons! Well, firstly you have to have a bond before you can take it to use for repairs. And that was only one of the minor problems that started to appear with this agency. I won't dwell on this, but it is depressing. Overall that particular agency cost us around $10k through their missmanagement. So.....if there are only a handful of Agents, proceed with caution, because sometimes in smaller communities they just can not get good staff. OK, this happens in larger cities too, but at least they have a bigger pool of applicants for available jobs to choose from.

We move to another agency and paint the properties (they weren't in a bad state of repair) and they have all now been let long term. Another point with regards to another agent in the area is that they did not like out-of-area landlords and would not rent our properties out unless there were no local landlords properties available at the time.

We have now tried every agent in the town. The current ones are certainly not perfect, but they are the best of a very bad bunch.
 
I grant done a much research into regionals as other people, but from what I can see with what I have looked at, its although they may be cf+ the fact that a cf- property close to town may cost you more out of pocket but the cg you get in return is far better than the returns from a regional. One regional I enquired about I was told that if the property was left vacant iut would most likely be heavily vandalised. But it had great cf+......
 
ZEUSvsHADES said:
I grant done a much research into regionals as other people, but from what I can see with what I have looked at, its although they may be cf+ the fact that a cf- property close to town may cost you more out of pocket but the cg you get in return is far better than the returns from a regional. One regional I enquired about I was told that if the property was left vacant iut would most likely be heavily vandalised. But it had great cf+......
Click to expand...

Not so! You can get CG AND cashflow from regionals. There are many investors that ONLY buy regionals. It all depends on sound DD.

Another point to note is that some investors can't afford/don't want to be out of pocket at all. Everyone comes to the party wanting something different and with different skills/experience/financial abilites etc.
 
Aaron_C said:
I always think for property you have to be relatively nearby to keep an eye on it. It's your money, after all, so you have to always be within driving distance to ensure your investment is not compromised in any way.
Click to expand...

I agree. This makes all the difference.
 
skater said:
Not so! You can get CG AND cashflow from regionals. There are many investors that ONLY buy regionals. It all depends on sound DD.

Another point to note is that some investors can't afford/don't want to be out of pocket at all. Everyone comes to the party wanting something different and with different skills/experience/financial abilites etc.
Click to expand...

sorry i was on my phone when i wrote that, yeh of course you would still get cg.
 
Thanks for all the replies.

Also thanks for bringing to my attention the issues with agents - very valid point I hadn't given much thought. Good stuff.

I know some people say invest in towns with 'x'+ population and not one horse towns, but like you said because I don't live there Would travel there extremely rarely it worries me that I wouldn't really understand the area as I do now for SEQ.

I also don't like the idea of interest only loands which seem to be preferred by most people with a lot of cash positive properties, I prefer the idea of paying off p&o on my properties over time even if it meant I only have 5 instead of 10.

Thoughts?
Again thanks for all the replies - I am only 20 and have only recently been really looking into property - have just signed a contract for my first 1! But yeah all this knowledge is really great and there are heaps of factors I haven even considered that get mentioned on this forum

cheers
YPG
 
Last edited:
YPG said:
I also don't like the idea of principle only loands which seem to be preferred by most people with a lot of cash positive properties, I prefer the idea of paying off p&o on my properties over time even if it meant I only have 5 instead of 10.

Thoughts?
Again thanks for all the replies - I am only 20 and have only recently been really looking into property - have just signed a contract for my first 1! But yeah all this knowledge is really great and there are heaps of factors I haven even considered that get mentioned on this forum

cheers
YPG
Click to expand...

You mean, interest only! Big difference!
 
YPG said:
Does it worry anyone else that the majority of properties that are cash flow positive are in a regional place?
Click to expand...

I don't agree with the thrust of your question.

I find plenty of properties that are +CF within a very reasonable distance of the CBD....no need to go searching out in the regionals.

.....although there are plenty of investors - some on this forum - who make a good fist of investing for both +CF and CG out in the regionals.
 
Dazz said:
I don't agree with the thrust of your question.

I find plenty of properties that are +CF within a very reasonable distance of the CBD....no need to go searching out in the regionals.

.....although there are plenty of investors - some on this forum - who make a good fist of investing for both +CF and CG out in the regionals.
Click to expand...



Perhaps I am just looking in the wrong areas- for Brisbane do you know where would I find a property with8%+ yield?
 
I agree with Skater on making sure you have the right PM. Some of them like to look after the locals, which means knocking on their door to ask them to pay their overdue rent and when they give them a sob story just tell you the rent will come eventually. And when you notice damage and they say "the tenant says it wasn't them". Find one that treats PM like a business, not a homeless shelter or trying to find friends by finding "nice people" places to rent.

The regional properties I've been the most concerned about in terms of being in a "bad" area have been the best properties for us due to some great property management.
 
Aaron_C said:
I always think for property you have to be relatively nearby to keep an eye on it. It's your money, after all, so you have to always be within driving distance to ensure your investment is not compromised in any way.
Click to expand...

Nah. I've got better things to do than driving past my properties to see if they're alright. That's what I pay property managers for.

Of course it does make it easier for maintenance but other than that it doesn't matter whether it's around the corner or thousands of miles away.
 
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