Hello,
i am new on this forum, but am familiar with property investing to some extent.
A question that i want cleared up is, ‘what is positive cashflow?”
what i mean by this is.. DEFINE cashflow positive?
I am not sure if this is covered elsewhere in this forum, so if this is a repost, i apologise. I just browse alot of posts, and many people are seeking positive cashflow PI’s, but i keep questioning myself, whether their definition, and the people that reply to their query are the same.
Does it mean:“Rental income” exceed “interest ONLY repayments”+ “property management fees” + “all other on going costs (land tax rates, body corp if aplicable, and general maintainence).
Could you guys clear this up for me,
Thank You in Advance.
Cheers,
Naume
Cashflow positive means money flows into your pocket as a net income, regardless of interest payments or tax deductions.
This is where hubby and I differ. He says principle repayments should not be included as they are a capital expense.
I think that if you lost your job income, principle repayments would still have to flow out of your pocket and therefore not a positive cashflow investment. Yes, you could try to sell the investment but what if the market was dead slow. You could even suffer a loss on sale and still own the lenders money.
Positive gearing is another thing. It means that after all expenses plus tax deductions, the investment shows a profit income.
If you want to get out of a hole, first stop digging.
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