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Positive Cash Flow

Posted by Paul Wilson

It is a long time dispute, should I buy a Positive Cash-flow Property or a Capital Growth Property?

 

I recently attended a function where the presenter was promoting his house and land services and wanted to make sure that the audience was aware that in his opinion the only value in a property is the Land and the not the building itself. He said, even new buildings are worth nothing after 40 years of depreciation, so make sure you buy for land only, capital growth is the way to go, not regional where there is less growth or where the properties you buy cannot be depreciated because there is no value left in them.

 

However at We Find Houses, we have managed to assist many clients to buy positive cash-flow properties mostly for the return without factoring any growth into the initial equations because that was the strategy they wanted. The fact is even with cash-flow properties the growth factor does eventually come. Here are just two examples that came to mind.

 

A 2 bedroom unit purchased for $78,000 purchased 5 years ago is valued in today’s market at $195,000 and rents for $195 per week, a return today of 13%, there is no depreciation on the building but that building that some would say has no value is still generating $10,140 of income for the owner each year.

A small 3 bedroom house purchased for $85,000 around the same time is valued in today’s market at $185,000 and rents for $205 per week a return today of 12.5% again there is no depreciation left in the building however like the example above I think the owner would see value in the $10,660 of income the property generates.

 

My Nan always used to say “Paul, Little fish are sweet” based on the two examples above, you would have to agree. Imagine 10 properties like that that are paid off by other people (your tenants). You would start off with a portfolio of just under One Million in assets, that in the past 5 years has grown to 2 Million and when paid off would generate passive income of $100,000 per year.

 

START NOW IT IS STILL POSSIBLE – THERE ARE SOME GOLDEN OPPORTUNITIES RIGHT NOW !

The current climate is generating excellent opportunities for both Capital Growth and Positive Cash-Flow investors. We have just listed a Positive Cash-Flow property for $70,000 that is currently renting for $120 per week, this would be an excellent addition for someone who wants to enjoy the cash-flow while holding a house on a large block without having a negative drain on your future borrowing capacity. It probably wouldn’t even stop you from pairing it up with an affordable capital growth property where the combined outcome would still be a return of 7% for both.

 

Regardless if you want Capital Growth, Multiple Income or Positive Cash-Flow properties to grow your portfolio, We Find Houses has a proven track record delivering exceptional properties with exceptional service.

 

I look forward to our team working with you to build your success stories.

 

Paul


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