Pre-tax Cashflow + anyone?

[MIL]

Anyone managing to buy any at the moment? Where are you buying?

[drelly]

Hi Mil and welcome. It's not 'where' but 'how'. The secret isn't location, it's in sourcing the deals in the first place.

[RentMaster]

I think it is a combination of both 'where' and 'how'. The where will give you a general starting point because some areas generally have higher yields than others. The How will determine how much better than the starting point you can achieve.

I have not been looking for quite a while now because I am working on other projects. But I will be looking soon. I get the feeling it is getting easier to achieve the 'how' bit. Prices are still quite high, but I think there are more motivated vendors around because there are fewer buyers.

[MIL]

Even with 2 streams of incomes...

...(such as house and granny flat) finding pretax cashflow + is very challenging at the moment in Hamilton at least since we are looking at gearing it 100%. If we put our own $$ in to make it + cashflow then that ends up costing us, not the company. The typical 3 bedroom houses rent has not kept up with the increases in purchase prices. Even the offer we put in at 11% below valuation last week wouldn't have been CF+ (and the venders didn't like our offer LOL). Some of the rents would need to double, or the purchase price dropped by $100,000 to make them attractive investments. Now that our personal debt is $0 we've got lots of equity to use, but unless we find CF+ deals we'll stall ourselves (only on 1 income at the moment). So the 'how' is finding desperate venders before you guys do???
MIL.

[cantthinkofanickname]

HI Mil
i have signed up on pre tax +ve propertry in the last week in whakatane, not the in the better part of town but it will add to the bottom line.Get your name out to two or three agents in each area you want to buy in. Tell them what you want and have finance arranged so you can offer cash uncondtional after D/D. THERE ARE PLENTY OUT THERE you just have to be willing to get dirty now and then.

luck is made not found

graham

[MIL]

Thanks Graham

Good to know they are out there.

Had an interesting conversation with an agent (not a good one as it turned out!!) this week who told me she had lots of properties that would be 'great investments'. I asked her to define 'great investments'. She said she had some brick ones and a weather board house that was nice... . When I told her we were looking for pre-tax cashflow positive she asked what that meant. The conversation didn't last too much longer.

Last week we rang up an agent in respose to an ad that was asking for 'offers'. Straight away the agent told me that the vendors had bought before they had sold. Wanted $265K, but would probably take $250K. Glad she wasn't selling (ie trying to get top dollar) for our home. At least we know that if we ring her up we might get info that other agents might not tell us .

[Aston]

This week I found a good do-up... RV $570,000. Agent suggested that the place would sell for about $625.000. She said I'd be wasting my time offering below RV..... I offered $500,000... the vendor accepted.

[MIL]

Bet you are glad you didn't listen to the agent :-)

[Stevegoodey]

Someone was telling me this week that they try not to insult the agent or vendor with offers that are too low to start with because they want to get the offer at least counter signed.

I thought bugger that the 1st offer should be a good swift slap in the face.
After that it's the agents problem to get it accepted, and then at the very least counter signed.

My thoughts.

Steve

[Dean@Massiveaction]

Kind of flogged to death in this forum but pos cashflow is always available anywhere anytime.
Sometimes the hard work is finding the motivated vendor.
Sometimes the hard work is negotiating non cash benefits.
Sometimes the hard work is in researching to find the twist in the deal to create the pos cashflow.
Sometimes the hard work is in going till you succeed.

The common thread in all of the above options however never changes ~ HARD WORK.

[Don and Liz]

similar questions in other forums at the moment. the deals are there but remember that really you want to be trying to achieve the best possible deal you can

[AlexT]

My quest for a +ve cashflow property

I have recently just finished 6 months renovating a property in Wellsford. It's a 4 bed house upstairs with a legal 2 bed flat underneath. It was listed for $280,000 I offered $255,000 and I settled on $260,000.

I initially allowed $10,000 for the renovation but ended up spending about $30,000. It's now a really nice home, probably too nice for a rental.
The upstairs is now rented out for $250 p/w and the flat $165 p/w. The rents are a little low but these prices are what attracted the tenants to this type of property.

I happy with the investment now that it's rented, but it was a lot of really hard work, not something I'd do again this way.

[cube]

Well done for sticking to it!

Did you have to convince the bank that holding the property for 6 months was worth it for the increase in value at the end of the day?

Did the 30,000 include the holding costs (interest on the mortgage whilst no income coming in)?

cube

[AlexT]

The bank didn't know how long we would be holding it. They were happy to lend the money based on existing equity.

Probably closer to $35,000 with interest costs. I havn't done my accounts yet to get the true cost.

[MIL]

Do you mind sharing about the $30,000 instead of $10,000 as budgeted? any lessons in that for everyone else?
Thanks