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Why Cashflow Matters

Why Cashflow Matters So Much – Up To A Point!

If your aim is to build and maintain a successful residential property portfolio over the long term then the number one rule is this: Cashflow is King.

Now it may be that if you are buying into a very rapidly growing market, like those in central and Eastern Europe, the capital growth you gain will be so excellent that you can afford – or should at least budget to afford – to set cashflow concerns aside to a degree.

You may decide the rewards are so great that it’s worth subsidising your investment for a while. You may even decide that the market is moving so fast you want to buy to flip – sell your off-plan property before completion.

That’s fine for when the opportunity presents itself.

But you can’t do this in all markets at all times. And, if you’re a serious investor looking at carefully compiling a large and very profitable portfolio that will eventually provide you with financial freedom, you will almost certainly have to take a more measured, less rapid approach.

And without attention to cashflow you simply can’t apply the basic principles that allow a first time investor to build a vast and hugely profitable property portfolio with minimal outlay.

Notice we say ‘minimal’ – very different from ‘nothing’. Don’t be fooled – even with so-called ‘nothing-down’ deals, there is always the need to spend.

The reason why cashflow is so important is all to do with gearing.

Perhaps you already know all about gearing, however, in our experience, many investors who believe they grasp it’s mechanics and its importance, in actual fact do not. Only you can decide.

Copyright © Property Secrets 2007

“Property Management Secrets”
Reproduced with the permission of Property Secrets.

Further information on this topic can be found in “Property Management Secrets”

For extensive, regularly updated information about UK and Overseas property investment and to purchase this book, go to http://www.propertysecrets.net


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