**Cash flow** is king, under estimating the cost of owning a property in the long run can lead to disaster.

Use a business like approach. If you bought at the right price and can manage your cash flow you should do well long term.

Ensure you are aware of the rents in the area of your purchase. What is the **vacancy rate** for that area or type of dwelling in that area?

Typically you should factor in 2-3 weeks per year vacancy. (4% vacancy = approx 2 weeks per year)
**Look after your tennants** however be aware of current market rentals. Do not overprice your property. Be ware that tennants may apply as a couple and then have others move in with them (not necessarily legal). There are also situations where if other units or houses nearby are paying less for rent your tennants may resent you or leave as soon as the lease is up.
**Rent Increases** Telstra recently introduced a charge for paying your bill as you have always done. The literature sent out said something like "to avoid a bill charge pay online automatically". Consumers are seeing more examples of predatory price increases especially in products and services that take time to rearrange like home loans or home broadband.

Small regular increases may prevent the shock and awe of a one off $40 a week charge.

**How much does it really cost to change your home loan in Australia**

The following diagram from the Australian Financial Review 23-12-2009 shows the cost of refinancing a loan with Westpac to NAB.

Some advisors say it is inadvisable to switch for around 20 basis points.

Buyers can shop around and receive up to 1% discount off published loan rates.

This calculation is useful to determine your monthly repayments.
**Principal** is the amount you borrow e.g. $150000.
**Years** is the length of the loan in years e.g. 20.
**Interest Rate** is the interest rate charged by a bank or financial institution e.g. 7.5.

This calculation finds the future value of an investment.
**Principal** (Initial Investment) is the amount you start with e.g. $10,000 **(PV)**
**Years** is the length of the investment in years e.g. 20. **(n)**
**Rate of Return** (ROI) the % rate e.g. 8.0 % pa **(i)**
**Compounding Periods per Year** how often the interest is compounded.

Use this calculation to help determine if you are better off investing in real estate or with shares or a bank deposit.

### FV=PV(1+i)^{n}

This calculation finds the future value of an investment.
**Original Principal** is the amount of the original loan e.g. $150,000
**Amount of Payment** is the amount paid per month.
**Number of Payments Made** this will be 1 for every month that payments have been made.
**Interest Rate** the interest rate charged by the lending institution.
**Remaining Balance** the amount left on the loan.

Use this calculation to help determine how much you owe on your loan. Notice how a slight increase in the amount of Payment has a dramatic effect on the remaining balance.

*disclaimer*

Financial decisions should not be made based on these calculators. They are provided as is for educational purposes only.