Hi Everyone
After reading on here for months and months, I am finally making my first post. To give a bit of context to my question; my wife and I are in our late 20’s and our combined salary is quite high so we can save almost $4000 per month after all expenses. We want to get into the property market with an IP to earn us additional passive income.
I am an Engineer by profession so can work with numbers well. I have made up many spreadsheets looking at different aspects of property investment, but my issue that I have now come to is:
Is it possible to find a cashflow positive IP using the following criteria? (the numbers come from a property in Mangere, Auckland)
Purchase Price ................... $265,000
Expenses:
Interest (100% at 6.5%) ..... $17,225
Insurance ........................... 1,000
Rentsure Insurance ................. 355
Maintenance ....................... 3,500
Rates ................................. 1,400
Property Manager (7%) ........ 1,610
TOTAL EXPENSES ............. $26,715
Income:
Rent (50 weeks @460p.w.) ... 23,000
TOTAL INCOME ................. $23,000
GROSS PROFIT .................. -$2,667 (loss)
The nett yield on this property is 8.7% ($23,000/$265,000) which is pretty good, but the gross yield (which after all is all that really matters) is -1.0%
I think that I am being realistic with all of these expenses. I have read quite a few threads on here talking about maintenance costs and was amazed by the amount that you need to put away.
Am I doing something wrong in my numbers?
Am I just not looking hard enough to find better yielding properties?
Thanks in advance, this forum has given me so much useful information already!
After reading on here for months and months, I am finally making my first post. To give a bit of context to my question; my wife and I are in our late 20’s and our combined salary is quite high so we can save almost $4000 per month after all expenses. We want to get into the property market with an IP to earn us additional passive income.
I am an Engineer by profession so can work with numbers well. I have made up many spreadsheets looking at different aspects of property investment, but my issue that I have now come to is:
Is it possible to find a cashflow positive IP using the following criteria? (the numbers come from a property in Mangere, Auckland)
Purchase Price ................... $265,000
Expenses:
Interest (100% at 6.5%) ..... $17,225
Insurance ........................... 1,000
Rentsure Insurance ................. 355
Maintenance ....................... 3,500
Rates ................................. 1,400
Property Manager (7%) ........ 1,610
TOTAL EXPENSES ............. $26,715
Income:
Rent (50 weeks @460p.w.) ... 23,000
TOTAL INCOME ................. $23,000
GROSS PROFIT .................. -$2,667 (loss)
The nett yield on this property is 8.7% ($23,000/$265,000) which is pretty good, but the gross yield (which after all is all that really matters) is -1.0%
I think that I am being realistic with all of these expenses. I have read quite a few threads on here talking about maintenance costs and was amazed by the amount that you need to put away.
Am I doing something wrong in my numbers?
Am I just not looking hard enough to find better yielding properties?
Thanks in advance, this forum has given me so much useful information already!
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