The biggest mistake investors make when looking for property

When property investors are looking for their next property they often get caught up in ‘the next best hotspot’ or ‘5 best locations for growth’. The problem with this kind of information is the focus is only on growth. This is an important factor but it’s not the only one.

Most investors are savvy enough to look at affordability and recently there have been a lot of articles regarding affordability, particularly in reference to the Sydney market.  

However, the biggest mistake that investors make is not understanding the net cash flow position of the property. That is rental return, based on accurate assessments, minus all costs associated with renting out the property. Management fees, rates, strata and time unrented.

This is a figure that should be worked out before negative gearing is taken into consideration. Many properties that are cash flow negative will look cash flow positive after the investment costs are taken into consideration.

It doesn’t matter how much growth your property makes, if you can’t afford to hold on to it, you’ll never realise the property’s potential.

To make sure your next investment property is one that will increase in value and you can afford, call Calla Property to make an appointment (02) 9016 2852.