Positive cashflow

A positive cashflow property puts money in the investor's pocket before tax. All costs (expenses and mortgage repayments etc.) are covered by the rent and there is still money left over.

The benefits of a positive cashflow property are clear. The property pays the investor for having it in their portfolio. Positive cashflow property increase serviceability therefore make investors more attractive to banks and lenders. In lay terms, the cashflow coming in as result of a positive property increases income in the eyes of the lenders, which gives investors more ability to borrow more.

The less favourable side of positive cashflow properties is that most of these properties are located in rural areas of Australia where capital growth is generally low. For investors looking to balance their portfolio, the extra income from Positive Cashflow properties can be used to cover the shortfall associated with the costs of holding high capital growth properties.

It is possible to turn a negative cashflow property into positive cashflow. The right loan product with a split facility could be the answer or recycling equity could solve the problem. This is explained in detail at our complimentary Property Investor Evenings.