All Topics / General Property / Positive vs. Negative cash flow

Viewing 4 posts - 1 through 4 (of 4 total)
  • Profile photo of cana05cana05
    Participant
    @cana05
    Join Date: 2004
    Post Count: 10

    What is a better option, positive or negative investments? I live two hours out of Melbourne and thinking about buying a property there. The problem is they are about $300 000 and the rent is not that high to cover them. Should I look there or stick to the country, where houses are cheeper?
    Thanks

    Profile photo of RodCRodC
    Member
    @rodc
    Join Date: 2002
    Post Count: 335

    Hi there,

    Only you can answer this question. You need to figure out where you want to be in 1,5,10 years time and assess which type of property will help get you there.
    If you’ve a high income and only plan to purchase a few properties then a -ve geared high capital growth property may be the go.
    If you’d rather not put money in every week from your own pocket and can accept a lower (maybe) level of CG then a cheaper +ve cashflow deal may be better. These will also help your serviceability so more properties can be purchased.

    Firstly figure out where you want to be, then determine which type of investment will get you there.

    regards,

    Rod.

    Profile photo of DerekDerek
    Member
    @derek
    Join Date: 2004
    Post Count: 3,544

    Hi Cana,

    It depends on what you are trying to achieve via property investment.

    There are people here who would spend their $300K on a couple/few cashflow positive properties. Generally speaking these people are pursuing a ‘cashflow’ investment vehicle based on rental income.

    Equally there are people who would be happy to put in some cash in pursuit of a growth focussed investment portfolio. In some instances this may amoount to a single property selected in a growth locality.

    So back to you – what is/are your investment beliefs? timelines? income level? adversity to risk? resources? exit strategy? and so on – the answers to these will determine what is best for you.

    The property you choose has to suit you.

    Derek
    [email protected]

    Property Investment Support Available. Ongoing and never stopping. PM welcome.

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    I think it is better to ask, which is better high growth or high cashflow?

    Positve cashflow is always better. There is no sense in losing $1 tax claim back 50c, unless there is growth.

    In my opinion, I think it is better to go for high growth property. Cashflow positive property is good, but a $20 per week cashflow is no good if the property is still worth the same in 10 years time.

    High growth properties are usually in the cities -with rather low rents, and cashflow properties are usually in the smaller country towns -with much smaller gains. But you can get high growth property that is cashflow positive.

    Terryw
    Discover Home Loans
    North Sydney
    [email protected]

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://structuring.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://Terryw.com.au/

Viewing 4 posts - 1 through 4 (of 4 total)

You must be logged in to reply to this topic. If you don't have an account, you can register here.