How To Calculate Investment Property 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\\\\/how-to-calculate-investment-property-cash-flow\\\\/#arve-youtube-cecxvwt1e5u659a0b2dbc4b4006748648","type":"VideoObject","embedURL":"https:\\\\/\\\\/www.youtube-nocookie.com\\\\/embed\\\\/ceCXvWt1E5U?feature=oembed&iv_load_policy=3&modestbranding=1&rel=0&autohide=1&playsinline=0&autoplay=0"}\\n\\n\\n\\n\\n\\nWhen investing in property it\'s important to estimate the annual cash flow. Here\'s exactly how to calculate the cash flow of an investment property.\\nGet Access to the Property Tools Cash Flow Calculator\\nTranscription:\\nOkay, when it comes to purchasing investment property, it\'s really important that you understand the potential cash flow of a property before you go ahead and purchase it. You want to understand whether or not that property is going to be positive cashflow and put money into your pocket or if it\'s going to be negatively geared and you have to pay money each month just to keep it and how much money you have to pay because you don\'t want to invest in a property thinking it\'s going to be positively geared and then find out it\'s negatively geared to a large degree and you\'re struggling to keep your head above water because you have to keep to keep this property and not go under. So in this episode I\'m going to show you how to calculate the cash flow of an investment property. So we\'re going to go through it the long way that I\'m going to go and show you a tool that I created myself that allows you to do it way shorter.\\n\\nSo here we have a property in Birmingham Gardens, New South Wales, which as we can see down at the map is just kind of out near Jasmine in Newcastle. So West Newcastle. This is currently being rented as a share House for 770 per week. That\'s if all the rooms are full. Currently there\'s only four out of five tenanted. So potential rental income, seven 70 per week asking price is 560,000. So to start with let\'s just go over here to property tools.com dot a u, which is the tool I created myself that just does these calculations for you. So I\'m just going to quickly punch it in. We\'ll see if it\'s likely to be positive cash flow. Then we\'ll go through all the individual steps if you just want to be able to do it yourself and you don\'t want to pay for this service. Super affordable but some people might not want to.\\n\\nAlright, so purchase price. What was our purchase price? Five hundred and $60,000. And rental income was seven 70. Okay. So it\'s looking like this will be positive cash flow of about $171 per week or about $9,000 per year. But how do we get that figure? How do we work out that cashflow ourselves? So first thing we need to do is look at the rental income which has seven 70 per week. So I\'m going to times that by 52 to get that annual rental income. I always like to calculate cash flow annually and then work back to the weekly from that I just find that\'s the easiest to do. Next thing you need to do is work out your loan amount. So the purchase price of this property is $560,000. What\'s happening here? Five hundred and $60,000. And then depending on what deposit you make. So maybe a 20 percent deposit that are working out how much of our loan will have.\\n\\nSo let\'s just do the full amount times zero point eight. So that\'ll give us a loan amount of $448,000. The reason we need this line amount, because that will work out how much interest we need to pay over the course of a year. So let\'s assume that our interest rate is five percent. To do the interest calculation, we can just do the loan amount times by five percent. That\'s going to give us our annual interest of 22,400. Now if you want to pay principal and interest on this, then you can use a mortgage calculator. So here\'s one from ing which I really love. And so if we go ahead and punch in 448,000, 25 year loan at five percent, then we can say that our monthly repayments are $2,'