Let’s be honest here “The Perfect property does not exist”
To find a property that has positive cash flow and has capital growth especially in the short term is very difficult to find. The better strategy is to have a balance between capital growth and cash flow properties in your foundation portfolio. Over time a cash flow negative property may become positive.
It is also possible to improve a property through renovations that could lead to positive cash flow and also increase capital growth
Therefore what’s the better option, capital growth or cash flow?
This all depends on your current circumstances, but there are a few considerations to take into account to know what might fit you best.
Do you want to increase your personal wealth, or do you want a source of income?
If you want to grow your personal wealth, then you should choose a capital growth strategy. As a general rule of thumb, capital growth is best for investors aged between 20 and 60, who are still accumulating their wealth. Buying high growth properties will allow investors to benefit from compound growth as their properties rise in value and amass significant personal wealth.
As you near retirement, you should‘ve created the wealth required to live the type of lifestyle you want. However, you’ll also require a source of income if you’re no longer working.
This is when a cash flow strategy is necessary as investors can utilise the rental returns as a means of passive income.
Whatever is your preferred strategy is essential to purchase in line with your goals and financial position, while also buying each property in the right order.