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Monday, January 29 2018

What is more important when it comes to property investment?

Should you chase growth or cashflow?


There are some life stage considerations involved in answering this question specifically. But for the sake of this discussion let's assume that you are still have another 15 - 20 years of full time work in front of you to "Fill your Gap"

If you're not clear about what your "Gap" is then check out this post as understanding this is pretty important. 

So, if you have a Gap to fill then without doubt you want your investment assets to be worth more in the future than what they are worth today. So, growth is essential.

But predicting growth is uncertain.

Irrespective of how much research and investigation you have done you cannot guarantee the amount of growth you will achieve or the time it will take to achieve it. Even if an area looks like it is about to take off and all the pointers are there. There is no guarantee that will happen. 

That's because many of the drivers of growth will be outside your control - you can't control the economy, government decisions, business decisions, global markets, interest rates etc.

You also don’t know when the market is going to hit the top and then start declining.

Look at Sydney which has enjoyed double digit growth for about 5 years. The heat has now come out of the market and prices are declining.

Which means people who bought in the last 12 months in particular are now seeing their asset value slip but are likely to be funding a large cashflow shortfall.

Eventually the market will bounce back again but the investor has to carry that shortfall in the interim.  

In most cases gains in property like any investment are going to happen over the long term. Sure, short term wins can happen but building your whole strategy around that would be more like speculation rather than investment.

What I would call a "Hope Strategy".

If you take a longer-term view, growth continues to be important but so does cashflow.

You need to be able to afford to hold this property through all the ups and downs that the market and life might throw at you.

If a property is costing little to nothing to hold or in fact fully paying for itself then holding over the longer term becomes much more manageable.

That's why our approach with clients is to help them find property that will deliver long term sustainable growth but also have little to no impact on their household budget and lifestyle.

That way they can get about their life without having to worry. It can just tick along in the background doing its thing.  

Like to find out more about how to own investment property without cramping your lifestyle?

Book in for a FREE telephone appointment with me and we can discuss if this type of property would fit into your plans. Book your FREE appointment now.

I look forward to talking with you

Greg Carroll
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07 3849 9822
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Posted by: Greg Carroll AT 05:25 pm   |  Permalink   |  Email