Can anyone find Cashflow + properties.

[Bob Kane]

And now to get back on topic - the title of this thread is cashflow + properties:
To make a property cashflow +ve just increase your deposit until the cashflow is +ve.
Quite simple. Just buy any property you see.
But is that the answer you were looking for Clark Kent?

[Monid]

Sure does.
Just to add to the confusing - I notice that in this thread that people refer to properties with a yield of 8%. This is quite common. This does not include interest.
So while the definition of yield includes interest, in practise, we don't mean it when we say the yield of a property.
Why is this?

It depends on whether people are quoting gross yield or net yield.

Gross yield is simply yearly income/value

People use this both to allow an apples to apples comparison between two properties and also (I suspect) because it sounds better in advertising since the number is larger.

It gives a rough guide to the worth of a property but only a rough guide - for example we make considerably more money off a property we own with a 9% gross yield than we can ever make off our property with an 18% gross yield.

Net yield is (yearly income - expenses)/ value
This is harder to calculate but arguably more accurate in terms of determining whether something is a good buy. (Though hardly the only consideration).

There are still decisions to make - for example what do you use as the "value" of the property - the purchase price or the estimated current value or the amount of mortgage remaining?

Each calculation has some use in different contexts.

Cheers
David

[Stevegoodey]

To compare apples with apples I like to look at $$'s cash +ve
per 100k of borrowings.

[Bob Kane]

What's the term for:
(rental income-rates-insurance-body corp)/market value?

If it's never been defined before, can we call it Bob's Yield?
Ok,ok, how about Property Yield?
I still reckon this is what everyone thinks whenever net yield is mentioned in adverts.

[Orkibi]

If you where to buy the property in cash WITH NO mortgage then the net yield will be effective as - Divide what you have left in your hand after all costs by your purchase price = that will be the net yield thy way you refer to. (an it is in theory)

but when you take in account mortgage interest cost especially when borrowing cost are over 7% (and most yield are below that 7% ( I find properties with higher then the average 5%))

then no matter who you look at it if the interest rate is higher then the gross yield for that matter you will NOT have any Cash flow out of the property - and the net yield Is -negative

In todays market when money cost you around say NZ average 8% the Gross yield in one of the main city's would need to be over 11% for a property to be generating Pre TAX cash flow. ( so the net yield would be say 9% = 1% different = your cash flow)

I hope it make sense.