How Changes in Interest Rates Can Affect Your Cash Flow
b'ARVE Error: Mode: lazyload not available (ARVE Pro not active?), switching to normal mode\\n\\n\\n\\n\\n\\n\\n\\n\\n{"@context":"http:\\\\/\\\\/schema.org\\\\/","@id":"https:\\\\/\\\\/onproperty.com.au\\\\/interest-rates-affect-cash-flow\\\\/#arve-youtube-9u6zco4zhoe659a0b2d6e506798627170","type":"VideoObject","embedURL":"https:\\\\/\\\\/www.youtube-nocookie.com\\\\/embed\\\\/9u6Zco4zHoE?feature=oembed&iv_load_policy=3&modestbranding=1&rel=0&autohide=1&playsinline=0&autoplay=0"}\\n\\n\\n\\n\\n\\nSmall changes in interest rates can have a huge impact on the cash flow of a property. In this episode we look at some examples of how cash flow is affected by rising interest rates.\\nResources Related To This Episode\\nProperty Tools\\n2 Properties To Financial Freedom\\nTranscription:\\nSmall changes in mortgage interest rates can have a huge impact on the cashflow of your property, turning a positive or neutrally geared property into a negatively geared property really quickly. A lot of people do the sums on the property at the current interest rate, but they don\'t think, okay, what if interest rates go up by half a percent? One percent, two percent, how\'s that going to effect my cash flow? So in today\'s episode we\'re going to look at how changes in interest rates can affect your cash flow. Hey there, I\'m Ryan from on-property dot com dot AU. I hope people find it and invest in property and achieve financial freedom. And one of the things that you should be looking at when you\'re looking at investing in property or when you\'re looking at your portfolio is what is your cashflow position. So what we\'re going to do is we\'re going to go through some basic examples about how rises in interest rates can affect your cash flow.\\n\\nAnd then we\'ll look specifically at some properties as well. Okay, so let\'s just start here. I found this property in Brisbane with the price guide for 450,000 to $500,000 that\'s renting for $765 per week. So I\'m going to go over to this tool over property tools.com dot EU, which is a tool that I created myself. And if you want to get access to that, then you can go to property tools.com dot EU and sign up for it. And let\'s just have a quick look at the cashflow of this property. So we got a purchase price of 500,000 and then we\'ve got rental income of $765 per week, which is giving us an estimated and weekly cashflow before tax of $213 per week or about $11,000 per year. And so this is looking at a five percent interest rate. And so we changed this interest rate up to six percent.\\n\\nWe can see that our cash flow drops from around $11,000 per year to 7,000 per year. And if we got to seven percent, we\'re still positive cashflow. Uh, even with this one, when we go to eight percent, it goes negative. So let\'s have a look at this and have a look at how cash flow is affected by interest rises or by the changes in interest rates. So using property tools, again here, let\'s take a loan amount of $100,000 at an interest rate of five percent, and then let\'s up that interest rate and see how much extra per week it\'s going to cost us. So I\'ve put the deposit at zero percent, so we\'ve got the full loan of $100,000 there and this actually capitalize the interest cost for us. So we can say $96, 15 per week at five percent. So let\'s say we raise this up to six percent, we\'re now looking at paying interest costs at $115 and thirty eight cents.\\n\\nSo that is about an extra $19 per week on $100,000. Let\'s say we again to seven percent, then we\'re looking at 134 and sixty two cents. So we\'re going with a two percent increase. We\'re gone from $96 up to $134, so that\'s an extra $38 per week. Now $38 per week doesn\'t sound like a much, it doesn\'t sound like much, but we\'re talking about $100,000 here in mortgage. So let\'s say we were to raise that up to a million dollars and if we had a million dollars in mortgage and saw that two percent rise, then instead of it being $38 per week, extra we have to pay is now $380 extra per week that we need to pay. So as you can see,'