Investor Corner

Investment strategies – for capital growth or for positive cash flow.

Purchasing a property with high growth potential would possibly entail a higher purchase price and will most likely have a negative cash flow – the cost of owning the property is higher than the income from the property. When owning such a property, in the initial phase one needs to cover costs out of your pocket, but in the long terms the negative gearing tax benefits result into decent tax savings and high asset value.
An investment property is positively geared if it earns more in rental income each year than the expenses on the property like loan interest, repayments, council fees, etc. Positively geared properties too result in good capital appreciation over time. and can make it easier to secure a loan.
We try to calculate and understand the appraised rental yield, investors’ personal situation, their goals, risk tolerance capacity and cash flow from regular income. Advice of your accountant or financial planner is important in making an informed decision.