Positive cash flow is one of the most popular strategies for property investors.
A positive cash flow property makes you a weekly profit from day one. This is because your total rental income is greater than the property’s holding costs, such as loan repayments, maintenance and council rates. So, once you pay a deposit and a tenant moves in, you should immediately be making money.
Once the property goes up in value, you can use the equity for a deposit on another property. Over time, you raise the rent periodically. As the debt is paid down, your cash flow becomes more positive.
Most investors aim for a gross rental yield of six per cent or more when looking to profit.
To calculate the yield, first figure out the annual rental income. That’s the weekly rent times 52. Then divide that figure by the property’s value and multiply by 100.