Finding positive cash flow properties in Australia can be as difficult as looking for a needle in a haystack. So today I am going to offer you some tricks and advice on how to find positive cash flow property in Australia.
I’ve been expertly able to find positive cash flow properties in Australia for over five years. It took me a long time since reading Steve McKnight’s From 0 to 130 Properties in 3.5 Years to actually find my first positive cash flow property. But since then I’ve worked out what they look like and how to find them.
So, how do we find positive cash flow properties all over Australia?
Tip#1: Calculate the cash flow
We first need to know how to calculate whether a property is going to be positively cash flowed or not.
I see a lot of investors making this mistake. They might see a property with $400/week mortgage and $400/week rental income and assume that it is a neutral property that will pay its bills.
But this investor has not calculated the extra expenses that come with owning an investment property. It’s very important that you learn to calculate cash flow of an investment property before you start looking.
You can do this by using something like The Quick Test. This is a simple calculation of whether or not a property is likely to generate a positive cash flow. Or you can go into more detail and use something like our Advanced Property Calculator.
What is important in these calculations is that you include both your rental income and all of your other expenses. These are things like your management fees, council rates, insurance, vacancy when the property is empty, maintenance costs, utilities, and so forth.
Learning how to calculate whether a property is going to be a positive cash flow or not makes your search much easier because you will able to estimate how much a property needs to rent for versus its price.
Tip#2: Make use of free tools
Start your search with the free tools that are available.
It’s very easy to find out what a property is going to rent for. Simply contact the agent and tell them that you are an investor who is considering the property and you would like to know what the rent would be. They will be able to tell you what they estimate the property’s rental income to be.
These free tools are a great starting point. Get used to using them and looking up properties. You should also practise analysing whether a property is going to be a great investment or not. This will serve you well as you start to find these positive cash flow properties.
Tip#3: Look at rural towns
Look at rural town centres – not small country towns but larger town centres. Examples would be Dubbo or Tamworth in NSW.
These larger rural centres can be great places to find positive cash flow properties. The prices are often lower than your inner city areas of a capital city like Sydney or Melbourne. The chances of getting a positive cash flow property are still not easy but will be higher.
You can also look in country towns. Travel out from one of the larger centres and investigate all the different and smaller country towns.
Here’s an example. Out from Parkes in NSW is a country town called Condobolin. It has approximately two thousand residents who often state that there aren’t enough rental properties to go around. Country towns can be a great place to find positive cash flow properties because the prices are lower and if the rental demand is there then you can get quite good rents compared to the property’s purchase price.
Tip#4: Look at mining towns
Mining towns are a great choice if you want to find a positive cash flow property straight away.
The prices are very high for the areas that they’re in. Towns like Port Headland of South Headland in WA have three-bedroom houses for over $1 million in the middle of the desert. But the rental return on that property can be over $2,000 per week.
Mining towns are skewed compared to the general market because there’s a lot of money in mining. These small towns have a huge demand for housing but not enough supply.
So check out mining towns if you really want to find and analyse positive cash flow properties. However mining towns have their own risks. Do be aware of that.
Tip#5: Look for dual occupancies
You could next look for dual occupancies. This could be in an inner city area or a more rural area. Dual occupancy properties are essentially properties that have been split in two. Each half has its own kitchen and bathroom and so forth and thus exists as its own dwelling.
These dual occupancies can create greater rental return than other properties because each dwelling has its own separate tenants.
Tip#6: Look at granny flats
You should also look for properties with granny flats. It’s becoming very easy in places like Sydney to get granny flats built. There is a great demand for housing in cities like this. The government has consequently made the building of granny flats much easier to get approved.
And so properties with granny flats could be a great way to boost the rental income of the property and get a positive cash flow property. This can sometimes be true even in capital cities.
Tip#7: Try a paid search tool
My last tip is to try one of the paid tools.
I highly recommend Real Estate Investar. Go to pca.im/freewebinar for a sign-up page that is in affiliation with Positive Cash Flow Australia.
It is quite an expensive tool. It costs several hundred dollars per month or less if you pay up front for the year.
However this tool truly is amazing. It is the Google of real estate searches. It searches through the listings for any specified key words and helps you pull out the properties that you’re looking for.
So you can search for the term “granny flat” and be provided only with properties that have mentioned having a granny flat in its listing. You could also search for key words like “higher rental return” or “10% rental yield” or so on.
These types of searches will then pull out properties that are more likely to generate a positive cash flow for you.
Positive cash flow properties are not easy to find. Even with these tips on board it’s not going to be simple to go out and find positive cash flow properties immediately.
Real estate agents will rarely say that “This is a positive cash flow property”. And you can’t search for those terms when using the free tools like realestate.com.au and domain.com.au.
But I hope that this has helped to get you started. It does take time to know how to find positive cash flow properties.
Keep practising. Keep looking. Don’t give up.
You can find more intense training or the step-by-step methods that I used to find positive cash flow properties all around Australia over at PositiveCashFlowAcademy.com. Check out the sales page and video to see if it’s something for you.