Positive Cash Flow Properties In Sydney – How To Find And Create CF+ Properties
Positive cash flow properties exist all over Sydney. I can already see the shock on your face “They actually exist in the largest capital city in Australia?!!!” The answer is a definite yes, you can buy positive cash flow properties in Sydney.
The only catch is that real estate agents don’t advertise them as “positive cash flow properties”. This is because it takes a true invest to know that a property can be positively cash flowed and create the property.
There are very few properties in Sydney that are positively cash flowed from the instant you buy them, without any work. However, with the advice from this post and a little creativity you could buy 10 positive cash flow properties in Sydney.
I am going to show you 5 ways you can create positive cash flow property in Sydney (or Melbourne, or Brisbane or any major city for that matter):
Lick and Spit
You can buy run down properties for a fraction of the price of a new property. You can then do a lick and spit and give the house a bit of TLC and turn it into a real gem.
Giving the house a new coat of paint (inside and out), new carpet and paint the kitchen and bathroom white and you can dramatically increase the rent (as much as 20% higher than the current rental yield). It might cost you a couple of grand, but the increase in rent could be just enough to make your property positively cash flowed.
Having double vision can turn almost any property into a positive cash flow machine. 2 x 2 bedroom units will almost always rent for more than 1 x 4 bedroom home. But most 4 bedroom homes already have 2 living spaces and 2 bathrooms. All you need to do is erect a few walls and add in a kitchen and you can now rent out 2 individual flats instead of one house.
This can dramatically increase your rental return. You may be able to get $600/week instead of $400/week. That is a rental increase of 50%!!! Could that change in rental income make a positive cash flow property in Sydney??? You bet it could!
NOTE: Talk to your council as you need to file for dual occupancy.
If you buy a house on a big block of land then you may be able to subdivide the property. This can generate a positive cash flow in a number of ways.
– You could sell the land and reduce your mortgage costs allowing you to produce a positive property
– You could build on the land and rent put both properties increasing your rental yield
– You could build and sell, paying off a percentage of your mortgage with the profit
No I am not saying you should rent out your properties to grannies. I am saying that there is a lot of potential in granny flats. If you can buy a property with a granny flat, then why not rent it out separately?
If a granny flat is already there then that is a winner. It is bonus rental income. Make sure you create private access and a private outside area for both the granny flat and the house to increase potential rental yield.
If you don’t have a granny flat then why not build one? There are companies dedicated to building just granny flats….and nice ones at that. I have seen people spend around $100,000k just on a granny flat, but they collected a 15% yield. Over time this rental incomes goes up too. Mix this with the house itself and you have a powerful income machine.
NOTE: Always check legalities with the local council and appropriate authorities.
Become The Bank
Finally you can turn any property into a positive cash flow investment by becoming the bank. It doesn’t have to be in Sydney, it can be in any suburb or town in Australia. Here is a quick outline of how it works. For more details read my post on How To Create A Positive Cash Flow Using Owner Finance.
– You buy a property (preferably at a discounted rate)
– You sell the property at a slightly inflated rate
– Instead of selling the property for cash as most people do, you become the bank. You charge interest and collect repayments.
By this I mean you sell the property to someone but they assume the loan with you instead of the bank. If you can sell the property for more than you paid for it then the buyers loan will be greater than your loan, so their repayments to you will be higher than your repayments to the bank. Giving you a positive cash flow. On top of that you can charge excess interest (1-3% more than the bank is charging you) and collect even more money.
This is completely legal and people do it all the time. You keep the title of the house until the last repayment is made, then the title switches hands. This means if the buyer fails to pay you then you can take back ownership of the house.
Extra Tip – Interest Only Loans
Using interest only loans instead of principle and interest loans can significantly decrease your weekly expenses. The less expenses you have to pay the less rent you need to achieve to obtain a positive cash flow. Watch the video below to learn more.
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