by Kim Willis
In a
Bind With Negative Cash Flow?
Is this You? You're as mad as hell and you're
not going to take it any more. You've had enough of negative cash flow
every month, and now is the time to do something about it.
By embracing our positive cash flow approach
you will at a stroke have a sound, viable way to transform your
financial situation.
The
Problem with Negative Gearing
Think about this for a moment. Why doesn't
the typical property investor in Australia own more than 1 - 2
properties? They can't afford to! Negative gearing creates a shortfall.
Although that shortfall may in part be funded
by the Tax Office, the balance has to be found from after tax income.
The tax savings may look great but don't get carried away with it. A
loss is a loss.
And if the property has no great chance of
making money in the short to medium term, why would you do it? Don't be
like some poor investors who have negatively geared themselves into
liquidation. Remember that the purpose of any investment should be to
create wealth, not destroy it.
One Final Point. If you start a business, or
lose your job, the tax benefits become irrelevant. You will have to pay
the mortgage without ANY tax relief reflected in your weekly pay
cheque.
What is
Positive Cash Flow?
Positive cash flow is simply the amount you
have left over after all expenses. Negative gearing means there is a
shortfall which has to be funded from other income. On the other hand
positive cash flow puts dollars into your pocket NOW. Doesn't that make
more sense?
Types of
Positive Cash Flow
We create 2 types of cash flow (from
property) - drip and bucket. Drip cash flow puts money in your pocket
each month. Drip cash flow can range from a couple of hundred dollars a
month to more than a thousand. On the other hand, bucket cash flow is a
lump sum payment that materialises when the deal matures and the
contract profit is crystalised, in 1 - 5 years.
Lead
with Positive Cash Flow, Follow with Capital Gain
This is not how most property investors do
it. They buy a house, rent it, then put up with years of negative cash
flow while hoping the value of the property goes up. Long term this is
a great strategy, but the problem is that it can be PAINFULL in the
short to medium term. On the other hand, if you owned four properties
producing $600 per month of POSITIVE cash flow, you would be receiving
$2,400 per month in total. You could then use this to subsidise the
purchase of capital gain style properties, thereby increasing your
overall portfolio. By taking this approach you can accumulate more
assets WITHOUT the strain.
Why
Positive Cash Flow Gives You Abundant Lifestyle Choices
If you had thousands of dollars a month
coming in and you didn't have to work for it, how would your life
change? It would certainly make more choices available to you. And
isn't that what true financial freedom is all about?
Options
For Cash Starved Property Investors
Sell Now, Settle Now. Trouble with this
approach, particularly if you need to sell quickly, is that you will
have to drop your price. And don't forget the hefty agent commissions.
Renovate and Increase the Rent. Can be a
useful approach, but after consideration of the costs of the
renovation, the extra rent is hardly likely to make a big difference to
your finances.
Renovate and Sell. Use this approach to maximise your selling price.
Sell Now, But Settle in the Future. Our
favourite approach. It's called rent buy, lease option or vendor terms.
We like it for a number of reasons. Firstly, you will get a dramatic
increase in rent - up to 100 per cent more than you are getting now.
Second, the price that you agree on with your tenant buyer will
invariably be higher than if you sold it on the open market.
Here's
How We Can Help You
Consult. A FREE Consultation will give you
clarity about how to convert your negatively geared properties into
positive cash flow 'cash cows'.
Educate (you about the possibilities). Learn
about the strategies and how they might work for you. A good place to
start is to:
Implement (take action). Lots of people have attended seminars and the
like, yet still haven't taken action. Action is the key and that is why
I created a Coaching
and Implementation Program
5 years ago. This is
where we hold your hand and help you do your first
deal. Way to go!
FREE PHONE CONSULTATION - ENQUIRY FORM (Also Includes FREE Newsletter Series)
Cashflow Programs respects your privacy. We won't
rent, sell or give away your personal info, ever.
