Positively Geared Investment Property
A positively cash flow property means that at the end of the month, after all expenses have been paid (loan repayments, management fees, and all other property expenses), you still have money left in your account after receiving rent.
For instance it is possible to have a positively geared property but when all the expenses have been paid the property ends up in negative cash flow.
There are ways to end up with a positive cash flow property from a negatively geared purchase and this is usually done by an upgrade of some sort on the property. It could be a renovation that has added rentable value, in other words an extra bedroom, or it could be that a granny flat (2nd income) has been added on the property, probably at the back.
For some investors, and probably more so those with only a couple of properties, it will more than likely mean that you are going to have to purchase outside of your local area to get the right positively geared property. Regional Australia has been producing some positive cash flow properties, but what also needs to be researched and considered is the fact that real estate values in the regional areas does not generally increase at the same average rate of real estate in other parts of the county.
These properties though can be a great starting point for an investor because they are usually much cheaper which means the deposit required is also easier to achieve.
If an investor can start this way then they can save the extra income and more of their own income and find the deposit for a second property quicker than trying to buy in the higher priced city areas.
Filed Under: Property Investment • Property Investment Tips
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