Positive cash flow properties are ones that have a rental yield that pays all the costs associated with your property using rent and still having profit. These costs include taxes, repairs, mortgage repayments (if any) and bills. In other words, it’s having a net positive after paying expenses using your collected rent.
High return and low capital growth
Most cash flow investors are willing to accept lower growth rates due to the investment being able to generate an income.
For example, if your goal is to eventually retire and live off your property income, then positive cash flow properties may be what you focus on. You can acquire investment properties that deliver a strong return, and once you reach your desired passive cash flow, whether it’s $500 or $5,000 per week, you can choose whether or not to keep working, and live off your property income.
Cash flow is also what helps you to build your portfolio. If you apply for a loan to buy a property, the first question the lender asks is: can you pay back the loan?
Wherever your income is coming from, it all gets taken into account,
When you invest for capital growth you are speculating and you’re forgetting that your number one job is to maintain mortgage debt reduction via a tenant’s income. If you have a tenant who pays their rent on time and looks after the property, and you actively pay down the mortgage with your cash flow, you can multiply that strategy and build a portfolio.