What is Positive Cash Flow Property?
Positive Cash Flow Property is simply a property whose rental income exceeds all expenses. It’s a property that puts money into your pocket, each and every week.
A Positive Cash Flow Property gives you income and with income comes choices. If, for example, you develop a property portfolio with enough positive cash flow to cover your day to day living expenses, you could choose not to reduce your work hours, or even to quit your job altogether.
Many people don’t invest in positive cash flow property because they can’t find any: that’s not to say that positive cash flow property can’t be found in Australia, it just means that these individual investors haven’t looked in the right places! There are several reasons this might be the case.
“I Want To Invest In The Place I Live In”
One reason for this is that many investors feel safer investing in property that is located in their city or town. City properties are generally more expensive to buy and to operate than properties in smaller centres or in rural areas, and while a city property may attract higher rents, the overall equation most often is a negative cash flow. However, having ‘local knowledge’ of the area and being able to drive past their property, makes many investors feel much more secure with their investment decision.
“I Only Want To Invest In Quality Properties That People Just Like Me Would Want To Live In”
Some investors make the decision to invest only in the types of properties that they themselves would want to live in. This means that they won’t ever see the opportunity that other styles of properties present in terms of cash flow. And of course, if the style of property they themselves would want to occupy is a four bedroom, two bathroom, two garage property in an inner suburb of a major city, it will almost always be a negative cash flow property.
This kind of investment snobbery can lead to some really bad investment decisions, and some missed opportunities! Some friends of mine made the mistake many years ago of choosing not to buy some basic 2 bedroom units in a country NSW town. They were inexpensive (at $20,000) which is what attracted my friends’ attention. When they saw them, my friends said that they thought they were really ugly and didn’t like the neighbourhood: for themselves! The properties would have immediately generated a positive cash flow (they discovered much later!), but they didn’t even bother to do the simplest calculation to figure this out: they just said ‘yuck, no thank you!’ Now the properties are worth more than 10 times what they could have bought them for. My friends now lament their investor snobbery which caused them to miss an opportunity not only to enjoy positive cash flow from day one, but to make an enormous capital gain as well!
Positive Cash Flow Property Is Not Just Bought: It Can Be Made!
Many investors buy property that could become a positive cash flow property: they just fail to see the opportunity in front of them. Many investors don’t look beyond what is there at the moment: they don’t see that the four bedroom house could be converted into two x two-bedroom dwellings with a simple redesigning of the property’s internal walls. They don’t consider that by furnishing a property, the increased cash flow through a higher rental income would far outweigh the associated expenses. They aren’t aware of strategies like wrapping or rent-to-buy that could give them the cash flow that ultimately could give them more choices. A little bit of property education can completely change the way you look at a property!
Positive Cash Flow Property Can Be Found In Australia: You Just Have To Look!
Positive cash flow property is certainly out there, but to find it you need two things: the education/ability to look at a property from many angles in terms of investment strategy, and the ability to carefully analyse the property to see if it will be able to produce the results and returns you are looking for. Take a look at our resource page for some great books and websites for education: and of course, you are in the right place to find the software to help you analyse properties and make the best possible investing decision.