Positive Cash Flow 1. Cheapies
Look in the lower price range in poorer urban areas or in country towns. Rental yields (gross) up to 10% p.a. possible. These deals are generally not great for capital growth. More difficult to find in recent years because of massive property price inflation in virtually all parts of Australia.
Positive Cash Flow 2. Lease/Buy and Wraps.
Your target market is first time buyers who can’t save, or others who have previously owned homes before, but cannot currently qualify for bank finance. Finance them yourself with lease/buy payment pitched at about 30—100 per cent above the market rent. The tenant buyer assumes ownership (no maintenance for you), but title is not transferred until final payment is made, or until they finance out of the deal. The best way to learn about these strategies is via the Rick Otton strategies which I wrote about recently.
Positive Cash Flow 3. Build and Rent
Find the right block at the right price, then build a low cost, low maintenance house. Go one better, and buy a larger block and subdivide, then build and rent.
Positive Cash Flow 4. Quick Makeover
A low cost reno job, just do what you have to do to make it look good. This will add dollars to the rent and the value of the property.
Positive Cash Flow 5. Packs on Lots
Think multiple dwellings on one block of land. Think 6-packs, flattettes and granny flats, boarding houses, serviced rooms, back packer hostels, half way houses, overnight accommodation (at beaches and near hospitals) and caravan parks.
Positive Cash Flow 6. Change of Use
Convert an asset into one that produces more cash flow. An example of this would be to buy a large house and convert it to student accommodation. Presumably (and we have examples of this strategy working really well), more cash flow is produced as a result.
Secure Your Future With Regular Cash Flow—Wraps and Lease Buys