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**muppet** · 05-05-2005, 11:32 AM

Hi Poi

Have you talked to a mortgage broker?

Regards

**Kiwi_Investor** · 05-05-2005, 12:30 PM

Hi Poi, I personally like to try and buy well to get CF+.

I have recently seen some bargins in Invercargill, eg $120k renting for $180-200 wk.

Make money when you buy, not when you sell, bargin hard with the seller and agent to get the best price for you, after all property investing is a business.

Good Luck !

**Fritz** · 05-05-2005, 12:41 PM

Poi,

if you are time poor and there are no opportunities to your liking how about simply paying down chunks off your mortgage ?

Equity ratio goes up, cashflow goes up, when the tide turns you are also in a good position to buy something that suits your wants nearby.

Fritz.

**hawkeye** · 05-05-2005, 02:00 PM

I tend to look at opportunity cost when assessing cashflow as it is a better measure of how good the investment is and if you could do better.

ie would you spend $410,000 to get your current $495 rent?

By doing this we decided to sell our Wellington properties that had positive cashflows as we'd had them a while during which time rents had increased, and purchased properties in Christchurch that had much higher rent for the capital invested. We were able to decrease our mortgages and increase our rents simultaneously.

You may find that your current investments are actually no better than everything else you're looking at, looking at it this way.

Depending where they are try partly furnishing your places with good second hand furniture (try Trademe for some bargains) and whiteware. It has to look appealing though! This works in places in central cities eg Wellington and Christchurch where some flats have everything down to bed linen provided and the rents are 20-30% higher than if they were let empty. Tenancies are generally for shorter periods (eg 3-6 months)though as it caters for people new to the country/city looking for somewhere to stay while they find their way around. It may not work with a 3 bedroom house as well as it does a 2 bedroom flat.

LJ

**MarkS** · 05-05-2005, 04:56 PM

Sometimes the best decision is to decide to do nothing. I agree with Fritz now is a good time to pay down the mortgages and get set up for the slump and, hopefully, the good deals to come.

**ChrisAshenden** · 12-05-2005, 03:49 PM

Hello Poi,

Fritz and Hawkeye both posted good and contrasting views.

My take is never to buy anything that decreases your borrowing power.

This means it must be positively geered after ALL expenses and before tax is taken into the equation.

Further, when I am buying a keeper I buy it for cashflow first and cap gain second. BUT for me the question is all about velocity on capital. This would tend to lead towards a strategy where you moved your equity/capital to the place it was liked most and returned fastest, with the greatest leverage on your resources (time, money, network, skill set etc).
Following this approach to the letter would seem to suggest moving to a greater return on your equity by buying an investment with a superior return on assets(be it real estate or otherwise), heavily leveraging your existing equity, or continually turning over your capital by trading (or other active means).

However this active strategy does not always sit well with many people who like to accumulate assets slowly, perhaps while continually reducing their overall gearing (the ratio of debt to assets or debt to equity) and generally keeping their day job.

An good mix is to just strive to get your original capital out of the deal (off the table) and subesquently keep the asset, with it owing you nothing. Robert Kiyosaki devotes most of his latest book on this topic. The goal here being to keep your capital moving, enabling you to buy asset after asset. Over time, gains in equity can be drawn on to enable the purchase of still futher assets. This will allow you to grow your portfolio and get a pretty good velocity on your money.

For you to keep doing this, each property (or asset) that you buy, must not detract from your overall borrowing position. Which means that it must be cashflow positive, including sufficient to cover any drawings against existing equity you might use.

Your question however was not on how to increase the velocity of your equity, I just threw it in there as food for thought.

You asked what examples can people give for making an ordinary property more cashflow positive. Here are a couple, in no particular order:

rent appliances to the tenants
rent furniture to the tenants
rent a carivan (extra bedroom) to the tenants
build (or roll on) a sleep out
build an extra room
allow the tenants to have any/either of extra people, extra cars, pets etc
carve up the house/property into multiple dwelling units
offer the tenants an option to buy the property, which will boost the rents, remove maintenance hassles and you can pick up an option fee for your troubles

for all the above, go ask the tenant what they want, you can then get paid for providing it for them.

or you could always pay down debt

best bet is to buy the property well in the first place so any extras are just icing on the cake.

If the only way you can make a property work for you is by putting up a considerably larger deposit, perhaps you need to look harder/more efficiently for your next property purchase or just try thinking outside the square. This will probably just bring you back to what you want out of your investments in the first place.

Other than that, you could always just take Fritz's suggestion, which was a good one.

Regards,

Chris Ashenden

**AustinWong** · 20-05-2005, 09:19 PM

Originally posted by Kiwi_Investor

I have recently seen some bargins in Invercargill, eg $120k renting for $180-200 wk.

I am interested as to your views on CF+ properties. Were you indicating with the property in Invercargill as shown above that this is a CF+ property?

From my reckoning, if borrowing 100% the rental would cover the mortgage and a bit. After allowing for maintenance, insurances, rates and vacancies of 2 weeks you would need a rental income of about $230.

Not sure whether you allowed for a deposit in the above scenario. Are you able to clarify how you determine if a property is CF+. I am interested in your take on it.

Thanks

**Dean@Massiveaction** · 21-05-2005, 07:10 PM

You've probably read more than enough already but to add my bit, forget Invercargill. There are plenty of 10% cashflow properties in Auckland. They just require some digging out. I settled on a property yesterday for $309000 returning $650 a week and have offers in on 3 more similar yielding properties in Auckland. You need to believe that they're there and be patient in finding them. If property goes sideways as everyone predicts over the next few years you will be in a much safer position by sticking to Auckland or at least major centres.

IF you'd like help to know how to find good properties in Auckland give me a yell. Contact details at http://www.acumen.co.nz/wa.asp?idWeb...;idDetails=117

**Cliffy** · 22-05-2005, 11:56 AM

Originally posted by Pooomba

I settled on a property yesterday for $309000 returning $650 a week and have offers in on 3 more similar yielding properties in Auckland

Hi Pooomba,

Can you tell us a bit more about this deal? How many bedrooms? Location?

IF you'd like help to know how to find good properties in Auckland give me a yell.

Are you charging a fee for this service?

Cheers,

Cliffy

**Dean@Massiveaction** · 22-05-2005, 03:18 PM

Hi Cliffy,
The deal is a 7 bedroom house in Otara leased to a govt trust who use it as emergency accommodation. Rent 100% guaranteed to 2010. Found it on TradeMe.
I do do mentoring and coaching as my business through Acumen so if someone wishes to engage me in that capacity then I do charge. However I love helping others succeed so always happy to offer whatever free advice I can over a coffee or an email. More about me at http://www.acumen.co.nz/wa.asp?idWeb...;idDetails=117

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