Residential Property

A Positive Cash Flow Property is one which enjoys a net gain based on the rental income being greater than costs associated with owning the property. These costs may include the expenses associated with purchase, legal/ management fees, rates, electricity and upkeep of the property. A positive cash flow property is often what many investors aspire towards, with their investment property actually generating a profit rather than recording a loss. The current conditions are creating a market where positive cash flow properties are now becoming more common. Property values have fallen in many regions while at the same time some areas are showing increased rental rates and interest rates are falling. The combined effect is that rental yields are trending upwards.

With confidence low, inflation high, some value declines having been recorded, more and more investors will be looking to purchase positive cash flow properties in order to reap the benefits of a return from their property and to also capitalize on future property value growth. With vacancy rates dropping, positive rental growth and value growth being minimal, it is anticipated that more and more properties will be moving into positive cash flow property. The most important thing to know when seeking a positive cash flow property is how much income is required to offset the expenses associated with owning the property – this will vary from buyer to buyer depending on their own financial situation. It is also important to ensure you research the rental market and get a firm understanding of what the expenses associated with the property will be and pay the best price possible for the property. The benefits of a positive cash flow property in your strategy are clear. The property pays the investor for having it in their portfolio. Positive cash flow property increases your serviceability therefore it makes you more attractive to banks and lenders; increasing your income and giving you the ability to borrow more. For investors looking to balance their portfolio, the extra income from Positive Cash flow properties can be used to cover the shortfall associated with the costs of holding high capital growth properties. Positive cash flow property is a way to see a weekly cash flow, and this exists where you find property with a high amount of on-paper deductions. This type of property can be found anywhere and is ‘property based’ rather than ‘area based’.

residential investment property is considered as positive cash flow property.  Residential investment property is a residential property which is rented out or considered a primary or secondary residence for anyone other than the owner. Residential property is currently undersupplied and this is a key reason why residential will continue to enjoy capital growth in the medium term. With residential investment property expenses, including depreciation on the property and interest on your borrowings, are tax deductible, you make money as the value of the property increases, you can leverage your investment and get rental income.

National Rental Affordability Scheme | Property Investment Victoria