I can’t tell you the number of times I’ve been asked “Should I be looking for a growth property or one that gives me cash flow?”
Property investing is very much like running your own business. I went into business to make money – not lose it.
So ask yourself this question – “If I am buying properties to make me money, why would I even consider a negatively geared property?”
Now before I get all the accountants up in arms, I understand how negative gearing and tax depreciation works. I’ve been investing for nearly 20 years and started off with negatively geared properties until I felt the pain of having ti use MY income to cash flow them and came to the conclusion that there must be better ways to own and run a property portfolio.
Over that time the properties achieved some growth but it meant that if I was to realise the gain, I could refinance and use the equity to buy more properties but if I wanted the cash, I needed to sell a property.
I needed to own properties that were giving me capital growth and positive cash flow to ease the strain of ‘holding them for the long term.’
There are always solutions to a problem and one of them is to manufacture cash flow.
Working through those ways to manufacture cash from properties is one that every savvy investor comes to learn as part of the natural growth phase of a serious and active property investor. There’s renovation, subdivision, creating a rooming house, adding a granny flat and many more ways to add to value.
There are so many reasons why there are only 0.06% of the population who own 6 or more investment properties. One of them is the incredibly important role that “strategy” plays in acquiring the right property each and every purchase so that lenders will continue to bankroll the next investment.
Property investing is a great vehicle to increase wealth over time but this only happens when there is a clear strategy, persistence and a time frame during the acquisition phase of building the portfolio.