08 May 2017

Cash Positive Should Bring in More than it Costs You

Let’s face it, that’s what an investment is all about, isn’t it? Anything less is a gamble. You are gambling on the fact that the property you are purchasing will go up in value, either due to general growth in the market or increased demand in a particular area. Even though many may not see it this way – buying a property that earns less than it costs you is a loss-making venture.

Would you buy a business that makes a loss year after year, with no hope of ever making a profit?

That is what thousands of property investors do year after year. Obviously, due to the negative gearing taxation laws we have in this country, this type of investing is encouraged, particularly by those with high taxable incomes. Provided the properties purchased have good sustainable growth, the strategy works from a wealth accumulation perspective. However, the individual investor is still gambling on the value of his or her purchase increasing in value.

Negative cash flow investing ties you to a job in order to maintain the viability of your investments.

Positive cash flow investing provides lifestyle and choices – without the constraints of having to work in a job. Work becomes a choice and not a necessity.

We always recommend that you seek professional advice as this blog is for general information only