10 TIPS FOR SUCCESS WHEN INVESTING IN POSITIVE CASH FLOW PROPERTY

  1. Look for properties in locations with an undersupply of stock, a new industry and/or an adjacent population hub with high rents.

10 TIPS FOR SUCCESS WHEN INVESTING IN POSITIVE CASH FLOW PROPERTY

  1. Build understanding of the dynamics between cash flow and long-term capital growth.
  1. Find properties with potential to add value at low cost.
  1. Be clear about how much return you need to create positive cash flow.
  1. Get good advice before refinancing for more than your initial property value.
  1. Be wary of locations reliant on one industry (such as a mine); you may find you own a property with little or no value if the mine closes.
  1. If considering using debt to fund a positive cash flow property, seek sound advice first.
  1. Avoid purchasing purely on the basis of weekly dollars in your pocket – make sure your investment is also likely to gain value over time due to factors including a growing population, increasing buyer demand and residents who are becoming wealthier.
  1. If possible, use positive cash flow to pay down mortgage debt on any other properties to fast-track portfolio equity growth
  1. Properties yielding three to four per cent more than your mortgage interest rate will often return positive cash flow.

Source : Australian Property Investor (January 2012)

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