How To Get Positive Cash Flow In A Capital City

It is possible to get cash flow in a capital city, but you generally have to create it. Today we are 10km from the Brisbane CBD looking at a property which has a lot of cash flow potential.

0:00 – Introduction
0:33 – This property has multiple opportunities for cash flow
2:14 – This property has a great layout for a granny flat
4:54 – Looking at the numbers

Details:

Asking Price: $550,000
Estimated Rent: $480-500/week

Granny Flat Build: $120,000
Estimated Rent: $310/week

Total Cost: $670,000
Estimated Rent: $790-$810/week

Transcription:

Ryan 0:00
It is possible to get cash flow in a capital city, but you generally have to create it. So today I’m joined by Simon Everingham from Pumped on Property. And we are on the road about 10 kilometers from the Brisbane CBD looking at a property here, which, if you purchase it right now, the chances of it being positive cash flow, not so high. But there’s definitely opportunities on this property to turn it into a positive cash flow property. So today as we walk through this property, we want to talk about how you can create cash flow in a capital city.

Simon 0:32
This one he is Yeah, really good opportunity. One because we’re in an area where you can legally add a granny flat in the backyard to create Julie income. But also, it’s one of the old school Queenslanders, it’s a high set. So downstairs according to the agent is actually legal height. So you’ve got a garage and a bit of a rumpus area down there at the moment. But there’s also the potential to build that in and convert it into some sort of living space, extra bedrooms, extra bathrooms, but then also do granny flat outside. So there’s lots of lots of opportunity here. So I think we should check. Yeah,

Ryan 1:09
so let’s go down and have a look at this property is currently listed on the market for around 550,000. And we’re saying we’ll probably rent around maybe that for 8500 per week. But as we come downstairs, we’re not 100% sure whether or not this is legal height or not,

Simon 1:29
you definitely want to get a building and pest inspection done and make sure that they can check the legalities, do a proper measure up and have a look, the agent did say it is a pretty dated property as well with some of the different things around so it’s always good to get that building and pest inspector in to make sure that you’ve got that, guaranteed notice that you can

Ryan 1:48
Yeah, so there’s a few ways to create that extra cash flow. One is through, I guess a more major renovation like filling in the bottom here, even that’s not that major No, because it’s already here. But adding those extra bedrooms or extra bathrooms, if you can can bump up the rental yield of your property, doing a minor cosmetic renovation like Simon did on his property. Or you could potentially do upstairs to bump up the rent and get some extra cash flow there. Or as we go through to the backyard, you start to say this property is created really well for granny flat and they had it in mind. So you’ve got the main property up the front there. It’s a high sec, Queensland, as Simon said. So all the bedrooms, all the living rooms upstairs, they’ve got a big deck over there. They’ve got an undercover entertaining space. And then they’ve got this yard here. Decent little size yard is a three bedroom, four bedroom,

Simon 2:40
three bedroom property at the moment, but they’re including the little rumpus room downstairs, which isn’t legal height, apparently. But you can it’s still usable space.

Ryan 2:49
Yeah. So the yard here for three bedroom is quite a decent size, obviously, the bigger house you go, Yeah, kind of they do like more yard space. But what’s really cool about this property is that then drops the land drops away. But they’ve got this retaining wall here, I guess, to keep the land flat. So if we come down here, this is apart from a few trees that would need to be removed, which are in the middle, as you can see where Simon is, this land has been I don’t know, if it’s flattened, it must have been flattened already. But you could build a granny flat in this little spot,

Simon 3:24
plenty of supply plenty of space for a granny flat. So most properties, especially in the area that we are in at the moment are quite slopey and do require a little bit of landscaping to get the granny flat there. But what I love about this, you know you’ve got your own separate little space here. And as you said, there’s plenty of room up there, they’ve got the big deck that they’ve put on the front and the back of the property and they’ve got this undercover outdoor entertaining space. So basically, you can throw a granny flat back, he can keep a fair view of the trees, which he’s going to add to the privacy of the granny flat and the privacy of the front

Ryan 3:57
property as well. You can also orientate the granny flat towards the back of the block. There’s a lot of kind of trees and shrubbery and stuff that blocks off the other property that’s over there. So the granny flat would have enough space down here, if we walk over. So you can just kind of say how large, this little backyard space is so much room for activity. So this is a really cool one. And what you would probably do is add in some steps, probably around about here somewhere. And then you would have over the top there where you can see that water tank, there’s actually potential to put a little carport or little, you know, to park your car.

Simon 4:39
So you’d have like your pathway down here. Following up to the side, and then with your deck over the back facing over the back, as Ryan said, which would be great. And then I think what we should do is walk back up and show them what that path would look like down the side of them.

Ryan 4:54
Yeah, well let’s do that as we talk about the numbers. So how does this add cash flow to a property and again Capital City tokens through someone that I miss

Simon 5:01
on that we’ve got $550,000 give or take for the property, which is going to rent out, you know, around 480 to $500 maximum per week at this point in time. So as you said, the single income just isn’t going to do it. Now, there’s a couple of different options here. If you want to go for the granny flat, to really maximize that positive cash flow, you can add your granny flat for another $110,000. So they go into it for 720,000 100 120 yen. So you’re into it for that $670,000. Now, in this particular area, I would expect to be at $310 per week for that rental income. So now you’re looking closer to that 790 $800 per week ran exactly, we

Ryan 5:46
total costs of around 670.

Simon 5:50
Now, if you didn’t want to go for the $120,000, we’ll come back in.

Ryan 5:54
So I will just show you here. As you can see, the driveway comes down here. And then you could have some parking right where Simon standing there. And then you can have the path going down on the outside of the water tank.

Simon 6:07
Yeah, so that’s ideal for the granny flat setup. But then what we’ve got down here, if you didn’t want to spend the $120,000 on your granny flat, if you were to build in downstairs, I’m not 100% sure how much that renovation would cost, you would expect probably minimum of $20,000 for a very basic, but you’re probably looking a little bit more like $40,000. But he could even shade that in, put a new bathroom in, put a new kitchen in, put a new bedroom in and fully self contained downstairs and read me out separately. So you could even just create Julie income from upstairs and downstairs if you want to save a bit of coin. But then you’ve also got the opportunity in the backyard to add the granny flat at a later date. So

Ryan 6:54
potentially do triple income

Simon 6:56
at this property. I don’t know 100% around the legalities in terms of having three different tenants on the one property.

Ryan 7:03
Yeah, I’m really going down that path.

Simon 7:05
No, we haven’t. In this particular area, you know, it may not be the ideal scenario to have three different lease agreements going on the one property. But even if you do shade in downstairs, you could convert it into a four bedroom or five bedroom, two bathroom house, which is one likely going to increase the value of that property, but also increase the rental income that you’re going to be receiving from that.

Ryan 7:30
Yeah, so as you can see with this property, if you just purchase it and just rent it out, probably not going to be positive cash flow. But if you do some of these things that we talked about, especially given the current interest rates, at the moment, there’s definitely potential to push this property into positive cash flow territory, or cash flow neutral territory. And so yeah, just a really cool opportunity that we wanted to show you. And there’s so many of these that are out there as well, where you can add a granny flat or you can fill in the bottom, Simon says crystal has, you know, filled in the bottom of her property and created Julian comma her property, because they were able to make the bottom legal height like just wasn’t, but they were able to, you know, make some minor changes to be able to make it legal height and do that. So there’s definitely a lot of properties out there. And there’s a lot of potential in different areas, you need to look into whether you can do it for the counter areas that you’re in, because you can’t do it in all parts of Brisbane and Brisbane City Council you can’t do it in. So you do need to look into that. But yeah, there’s a lot of opportunities to create positive cash flow in a capital city. So he had a good area 10 kilometers from the city, get that long term capital growth, long term sustainability and demand for your property, get that security of a capital city, but then get the cash flow as well, which helps you pay off the property faster, helps you sleep better at night helps you move towards your goals of financial freedom or whatever it may be.

Simon 8:53
That’s right. So these don’t come up all the time. This one is one of the more ideal situations or opportunities. And, you know, for the right price looks really interesting.

Ryan 9:03
Yeah. And so we’ll obviously, Adam is doing the inspection on this property. And so we’ll look into it in more detail, give feedback to clients, and then it’ll be up to them to see whether the numbers stack up. And they’ll have to negotiate on this property and see what happens with it really a really cool opportunity. So we wish you the absolute best of luck. As you go out there. And you look for cash flow opportunities like this in the capital city. I hope this opens your eyes to show that it’s possible. If investing in something like this is something that you’re interested in. Then Simon and the team over at Pumped on Property are offering free strategy sessions. So you hear on the phone today. And we can talk about where you’re at what what you want to achieve in your property investment journey. And they can help you create a strategy and see something like this might work for you. go to onproperty. com. au forward slash strategy. And you can learn more about that strategy session over there booking a time with Simon or his brother Ben and have a chat to them. And if you want to take the opportunity to work with them, you can Or then you can go out and take that strategy and implement it yourself. So again, go to onproperty. com Au for strategy to go ahead and check that out. I wish you the absolute best day whatever it is that you’re doing. How’s the weather is better here today

Simon 10:14
starting to look like Korean rat but it’s okay

Ryan 10:16
and until next time, stay positive

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