When investors come and talk to me for the first time, many are considering investing in either a high cashflow property or an inner-city, high growth property.
My first response is to tell them, ‘Why don’t you aim for both growth and cash flow?’
One of the biggest myths in property is that you can’t achieve cash flow and growth at the same time. Many of my clients are even shocked to discover what’s actually possible.
In fact, there are many locations all around Australia, where you can achieve high cash flow and strong capital growth.
These types of locations are typical in larger regional areas or the smaller capital cities and have house prices in the $300-500,000 range. These locations are generally not the best performers historically with growth however their supply are downward trending month on month with stronger demand trends, low vacancy rates, good rental yield with rents trending higher.
I recently purchased a property in South Australia, that has seen 10% growth in the last six months, with a 5.7% yield in a suburb just 19km from the city. These opportunities exist when you know what to look for.
And while it is very possible to get both growth and cash flow, you still need to inhibit an investor mindset and ask yourself what are you trying to achieve?
If your disposable income is average, it’s important to understand that building a property portfolio is actually a very achievable goal, despite what many might think. Investing in properties that achieve capital growth while also generating cash flow is critical if you are to move forward because you need both elements. Growth will expand your portfolio, while cash flow helps service the debt and propels your portfolio to grow.
One of the key points I stress to all my client’s creating wealth through property shouldn’t impact their quality of life. If you have a property portfolio that is causing you stress and anxiety with trying to meet monthly repayments, your property portfolio is not really working for you. Again, it’s why cash flow is vital.
For now, just understand that there is always a way to move forward in property regardless of your situation. You can certainly obtain cash flow and capital growth at the same time, and this is normally the best way to build a portfolio so you can further extend your serviceability limit.
It’s important to also note – every one of my clients have different strategies. We put together a game plan for them to achieve their end goal and work towards it. So what’s your game plan in your property Journey?