Logan the clear winner of Queensland’s Top Preforming Cash Flow suburbs!
According to REIQ data Logan suburbs rate heavily in the top 5 preforming suburbs for cash flow positive investments. Two Logan suburbs also feature in the best growth suburbs, coming in at number 7 & 8 respectively were Waterford and Bahrs Scrub.
Who suits a cash-flow strategy?
- Investors finding it difficult to get a mortgage due to tight cash flow.
- Average to lower income investors.
- Investors nearing retirement.
Cash flow - Investment Properties
As the name suggests, a cash-flow property investment strategy is where the priority is cash-flow.
This means there’s less focus on capital growth and other strategies such as renovation or development, although they’re also considered.
Typically, a cash-flow strategy is where the investment property earns more rental income than the cost of mortgage, property management, rates and other maintenance costs.
This strategy is generally favoured by many beginner investors, particularly those that are earning lower to average income.
- Higher borrowing capacity. Because the rental income covers most of your holding cost, you have greater disposable income that enables you to borrow more to invest.
- Extra cash flow. The extra cash flow can help you offset any shortfall you have if you’re holding a negatively geared property.
- Easier to ride out economic downturn. Having a property that’s self-supporting means you don’t have to sell it in a hurry if you lose your job.
- Generally, lower capital growth. Typically, higher yield, cash-flow properties are located in regional towns or in lower socio-economic areas where there’s higher demand from renters than buyers. As such, there tends to be lower capital growth.
- Slower to build equity. The lower capital growth rate means it’s also slower to build equity that you can then access to invest further.
- Low to no tax benefit. Because your investment property is generating income equal to or more than your expenses, your tax deduction is also lower. If your property is making more than it cost you to hold it, then you may even have to pay tax on it.
Data Source: REIQ