Conversations with a Pug – Which cash flow strategy works best for investors?
Which cash flow strategy works best for investors?
Before you invest in property you need to decide on a cash flow strategy. There are two main options to choose from and they both offer different tax benefits.
Positive Cash Flow Strategy
If you are making a profit from a rental income this is known as positive cash flow. This is a popular choice when interest and vacancy rates are low because you can capitalise on loan-to-value ratios (LVR) and reduced repayments. You can claim on depreciation and take advantage of special loan features such as offset accounts.
Negative Cash Flow Strategy
If your rental income is less than the expenses your property generates, never fear. This is a strategy some people use to reduce their taxes and make more money in the long term. It’s a great option if you have a reliable salary as you can offset any losses against your income.
Negative gearing can be complicated so I definitely recommended speaking to a professional before you make a decision. Furthermore, the lender and loan you choose for your investment loan needs to match your cash flow strategy.
This is something I am happy to help you with so feel free to call me.
My Very Best To You Always,