Why Positive Cash Flow is Important

If you don’t buy well and your property rental doesn’t cover all your expenses, you’ll have to make up the shortfall from your own pocket.
A positive cash flow property covers all expenses. Any spare income can be used as a deposit on your next property
.

Tip: If you want to build a property portfolio it’s a good idea to get a fixed rate ‘interest only’ loan. Paying principal early on will reduce surplus income and is likely to impact on your ability to borrow and expand, as will insufficent equity.

Photo by Free Photos for Websites

Negative gearing, on the other hand, works by making a loss on property and claiming an after-tax refund for this. The trouble with this approach is that you are losing money.

We were making money with someone else’s money and we could’ve kept going except for the fact that there was a downturn in the market and it got progressively harder to purchase properties under market value.

Now the markets have crashed those good times to purchase real estate are here again. Do your sums and happy buying.

Disclaimer: These techniques worked well for us however we would always recommend getting professional advice before proceeding with any purchase.

Advertisements
This entry was posted in Cash Flow, Real Estate and tagged , . Bookmark the permalink.

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s