Ask any property investor this question: Did you know what the cash flow would be on your property before you purchased it?
More than 90% of the time the answer will be NO.
This is an extraordinary thing to overlook. Cash flow is how much a property will cost you or profit you on an ongoing basis. The vast majority of investors really aren’t clear on how much their investment is actually going to cost them before and after tax.
Understanding cash flow
Some properties will have a positive cashflow, where the profit earned exceeds the yearly expenses after depreciation and tax deductions. By contrast, some properties will have a negative cash flow. This means the investor must cover the difference between the total cost of owning the property and the profit earned from rent or tax deductions.
When investors don’t know that their property has a negative cash flow, they can be left unable to cover the costs and be forced to sell the house.
Property investment is a long term game, the real estate market fluctuates and if you are only able to buy and keep a property for a short period of time there is no guarantee that you will come out on top.
Watch the above video to find out some more tips for sticking to the fundamentals and making a great property choice.For personalised guidance, book a discovery call. We provide a full cash flow report for any property we recommend to our clients.