Cashflow is King

or

Asset Rich But Cash Poor

which do you look for when investing in property?

sometimes i get offered a property which will make me good income on the rent, but have little built in equity or chances of capital gain in the near future. these are normally ex-council houses in bad areas, not to knock ex-council houses just that some areas just haven’t increased in value in the last few years and don;t look like they will either.

other times i will get offered a property which has lots of inbuilt equity (as it is below market value) and good chances of capital appreciation but the cashflow is either poor or negative. negative cashflow is when the rent coming in is not enough to pay for the outgoings, such as mortgage payments and maintainance.

the best properties i get offered are ones that have lots of inbuilt equity and make me a decent ammount of money on the rent every month. these properties i will buy all day and everyday. these are not always available and quite hard to find. i am not talking about off plan/new build apartments with dodgy valuations. i’m talking real houses with real discounts.

my question is if you are offered the first two options which one would you choose? more cashflow, less asset or no cashflow and more asset?

i think that the answer lies in a balanced portfolio. Cashflow obviously is important to a poor man such as me. but for real long term gains its the capital appreciation which will make the difference. i do and will take some low/no cashflow deals that give me plenty of equity and good chances of more capital gain in the future. but most of my portfolio will be built with cashflow producing investments properties.

if any serious investor wants to take some of the properties on that just miss the mark for me then drop me a line. I always have excess deals coming in, much more than i can handle.