EPI 029 | Ten tips for finding Positive Cashflow Property – Part 2

Everyday property investing - podcast episode

 

Ten Tips for Finding Positive Cashflow Property – Part 2

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(33:30)

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This episode we continue on with our ten tips for finding positive cashflow property.

If you haven’t done so yet, then check out Episode 28 where we list the first five tips for finding positive cashflow property.

Key points we talk about:

  • Tenants – and the lack thereof!
  • Renovating to change the profile of a property
  • Property Development
  • Interview with Property Developer and Property Development Manager – Jo Chivers
  • Maximizing the usage of your investment property
  • Negotiating interest rates
  • Putting in low offers (we bang on about this one for ages!)

Actions & Quick Tip:

  • Ring your bank and negotiate a better interest rate!
  • Using your knowledge and research skills, find 3 more potential positive cashflow deals online.

 

 

Comments

  1. pauline klemm says:

    Hi guys every time l read articles by michael yardney it confuses me. He maintains two reasons why investors dont make money is buying positive cash flow properties and buying in regional centres. These are two strategies l was considering, and strategies that l know you two follow. As a new investor its very confusing. I want to lower my risk , but at the same time we are doing this for wealth creation. Its seems michael advocates higher levels of debt with the use of line of credit, and only advises buying in areas of strong growth close to the CBD, but l cant see how these cant be very neg. geared properties. Help!!!

    • Hi Pauline,
      I can see the dilemma and it’s one that everyone faces – including me, what is the right strategy? Michael Yardney proposes one method for wealth creation and he has been very successful with his strategies, however, there are many ways to ‘skin a cat’ as they say!

      You are right that the ‘growth properties’ (remembering that any proposed growth is speculation and not fact) that are close to the CBD can be very negatively geared, you can do things to help that situation, such as renovation to increase yield and increase value, however, these properties may still be negatively geared. Buying several of these may be unachievable as you have to service the loans and so you’ll be capped out somewhere along the line and also buying negatively geared properties will tie you to your job as you’ll need to pay the shortfall on them every month.

      Buying for cashflow only also has it’s down sides. Often a house that is positive cashflow may only bring you $50 per week and so it’ll take a lot of these to replace your income. If these properties are in an area with little growth then having only these types of properties will mean your wealth creation is slow going as the equity you build each year may be small.

      So what is the answer, which strategy should you be following? For me, this comes down to what is it that is your primary goal here and what is the timeframe for achieving it? This means when do you want to ‘retire’ (or at least have the option to if you wanted) and how much annual passive income would you require. You need to start at that point and then work backwards to determine the best way to achieve it.

      I could go on and write an essay here as for each person the answer will be different, however, for the sake of expediency, I’ll leave it there. In the words of Stephen Covey (7 Habits of Highly Effective People) you need to ‘begin with the end in mind’. So work out your end goal first. To come up with a strategy can be a tricky exercise but remember you don’t have to do just one thing – i.e. Positive cashflow, Negative Gear, Renovation, Development etc…You may well own properties that are ‘growth’ properties and offset them with properties that are ‘cashflow properties’. You may renovate some to increase equity and yield, etc.

      I hope this helps, long winded answer!!

      Cheers,

      Kaz

      • pauline klemm says:

        thanks for your reply. I love it how you and den reply to all emails. I was sorry to hear that den is no longer on the podcast, he grows on you.Looking forward to your interviews. Just wanted to tell you that your podcast was the reason l started investing. It took me about 6 weeks to go from number one to 44, l absolutely devoured them. I suppose investing must have struck a chord with me, lm a control freak and investing lets me control, l love it. I cant thank you enough. After two months we have bought a property in orange nsw. The block is big enough to put a granny flat on and that is what we intend to do. We engaged the services of a private town planner who is organising permits etc for us. I went on my own to orange for three days last week. I looked at 12 properties the first day to guage the market after zeroing in on two properties on the internet before l left. I know investors buy sight unseen but seeing as l am a novice l didnt have the confidence to do that. Going there was a real experience. I had to try and make out l knew what l was doing with the real estate agents. Dont know if l was successful. The area we bought in is in the lower socio-economic area . It was listed at 215,000. I knew they bought it for 187,000 8months prior and found out reason for sale was a divorce. We ended up buying for 200,000 after they were adamant they wouldnt drop below 215,000. i had researched the market extensively, and after viewing 12 other houses think we paid the right price for it. It will need 20,000 renos done on it two weeks prior to settlement ( carpets , painting, new kitchen and switchboard/maybe rewire) and we plan to go ahead with granny flat as early as we can.Yield after renovation should be 7.23, and its value l estimate will go up to 260,000. So an instant value increase of approx 30,000 with expenses (inc purchase and renos) .With a granny flat we estimate yield will be 8.28( conservative) Flat will cost around 95,000 for building costs, council developement contribution fee, carport for both residences and cost of town planner who will do all the certification. This guy has been fantastic, l see what you mean by having a team of experts around you. The second day l was there l ran around orange getting lost numerous times, and lined up tradies and builder for the work we require. It will be more difficult doing a remote renovation but l believe it is achievable. If l knew two months ago that we would be buying intertstate, doing a renovation and developement all in one go for our first property l would have laughed. We also have a mentor called kevin lee who has being invaluable- another expert on our team!Without him we couldnt have done it. Like l said it was you guys that got me going, and l wanted to say thank you
        Cheers Pauline

        • Hi Pauline,

          Thanks so much for telling us your story about your first investment – and I’m truly honoured to think that our show has been the thing that got you going!
          It sounds as though you are made for property investing by the sound of what you’ve achieved already!
          I love that you went up to Orange on a ‘property road trip’ – it is so valuable to get in there ‘on the ground’ isn’t is?

          Reading through everything that you’ve done – research your properties, go and check it out, negotiate with real estate agents, planning a renovation, planning a development and building a great team around you – absolutely amazing to see everything that you’ve done already!

          Well done and keep us informed on your progress!

          And thank you for sending in this sort of feedback – it really motivates me to know that we are having an impact on people’s lives!

          Cheers,

          Kaz

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