Capital Growth vs Cashflow - Which Is BETTER? The BEST Australian Real Estate Strategy in 2022

Which is better? Positive Cashflow vs Capital Growth Property Investing In 2022.

In this video I cover 6 essential things you MUST KNOW in order to create the right strategy and develop a large property portfolio.

Chapters:
00:00:00 - Cash Flow vs. Capital Growth
00:01:37 - The Importance of Rental Growth and Holding Properties
00:03:04 - The Importance of Cash Flow in Property Investment
00:04:28 - The importance of cash flow
00:05:52 - Property Investing Strategy
00:07:16 - The Importance of Growth in a Real Estate Portfolio
00:08:43 - Short-Term Growth and Capital Growth
00:10:06 - Property Investment Mistakes
00:11:31 - The Importance of Both Growth and Cash Flow in Property Investing
00:12:45 - Debunking Property Investment Myths

LEARN MORE 👇

❤️ JOIN THE COMMUNITY & GET FREE SUBURB TIPS + STRATEGIES

🎬 MUST WATCH VIDEOS

📥 MESSAGE ME!

DISCLAIMER: No Legal, Financial & Taxation Advice
The Listener, Reader or Viewer acknowledges and agrees that:
• Any information provided by us is provided as general information and for general information purposes only;
• We have not taken the Listener, Reader or Viewers personal and financial circumstances into account when providing information;
• We must not and have not provided legal, financial or taxation advice to the Listener, Reader or Viewer;
• The information provided must be verified by the Listener, Reader or Viewer prior to the Listener, Reader or Viewer acting or relying on the information by an independent professional advisor including a legal, financial, taxation advisor and the Listener, Reader or Viewers accountant;
• The information may not be suitable or applicable to the Listener, Reader or Viewer's individual circumstances;
• We do not hold an Australian Financial Services Licence as defined by section 9 of the Corporations Act 2001 (Cth) and we are not authorised to provide financial services to the Listener, Reader or Viewer, and we have not provided financial services to the Listener, Reader or Viewer.

#PropertyInvestment #PassiveIncome #Australia #RealEstate

[AusPropertyMasteryWithPK]

❤ JOIN THE COMMUNITY & GET FREE SUBURB TIPS + STRATEGIES

[kathytr]

Notes:
- yield is not enough: need rental growth or else income isn't rising.
- growth is not enough: need to hold property in 10-20 yrs and be subject to recessions, pandemics, inflations etc...if it costs more to hold (yield is 3% and costs you 20K...you are at a loss, negative gearing is like losing money and trying to claim barely the same amt back). Growth is engine, cash flow is oil. Need right oil so engine works. Vice versa.
- use cashflow as borrowing capacity: need cashflow to withstand ups n downs of economy. Banks are now more restrictive to lending, if you buy negatively geared property you are stopping yourself from buying another property. Need GROWTH of one property (not cashflow) to pay off other properties. Debt initially allows us to control assets. Secret= quick growth, use data factors micro measurable systemisable predictable short term growth so in 18months- can take out equity.

Summary: cashflow AND capital growth (short term growth using data), not a flying pig, can aim for both. Don't wait 50-60 years stuck in 9-5

Last hack: avoid pairing properties. Don't buy one cashflow n one growth. You don't have so much money to just take half benifits. You'll run out of equity. Every property must give you BOTH


Things I don't know
- blue chips

[talkaboutmoney]

There is no right and wrong, you need both. It’s a matter of what you need next for your portfolio. An ever balancing game

[maxboydie]

Obviously total returns are cashflows + capital gain so ideally you want both. But I think in the current environment, if I have a choice between guaranteed positive cashflows from Year 1 and steady / slow capital growth (e.g. Cairns, Adelaide) vs. Negatively geared property with "Expected capital gains growth" (e.g. Sydney, Melbourne) I'm taking cashflows. If your property is negatively geared now at record low interest rates it's only going to get worse when rates go up. So you'd have to make up for this cashflow loss with substantial capital gains (which are not guaranteed in a rising interest rate environment, could happen, but could easily go the other way). I think generally speaking capital growth is much harder to forecast compared with cashflows. Cashflows you can look at vacancy rate, current rental yield, geography of the city (i.e. whether there are limitations to additional housing supply due to geographical constraints like national parks as an example). Capital growth depends on other variables as well like interest rates and lending standards which makes it harder to predict in my opinion. Another point is the population growth rate has steadily declined over the past 50 years from a peak of 4-4.5% in the 1960s/1970s to 1.3% currently. IMF forecast Australia's population growth rate will continue to fall over the long term down to around 0.50%. I think a lot of capital growth over the past 30 years is due to lowering of interest rates + population growth (the baby boomer generation entering the workforce and starting their own families, all of a sudden you have this massive increase in working adults looking for houses and the supply can't match the demand). To maintain the same capital growth going forward I think we'd need to ramp up immigration/skill migrants to compensate for the loss of natural population increase. All of this is too hard to forecast accurately so hence why I'm going with positive cashflows and any capital growth is an added upside (only caveat is the city the property is in should not be a volatile mining town with the risk of a declining population, any decent sized city say $100k+ people with consistent positive population growth is fine IMO). Curious on your thoughts on Perth regarding the fluctuations in house prices (house prices were declining from 2011 to 2019). I understand your clients have bought in Perth, and I liked the area due to the strong rental yield, low vacancy and very high median household income relative to house prices (I believe the highest anywhere in the country). How do you remain confident that house prices won't be volatile going forward? Maybe there's something I'm missing. E.g. income/population of Perth has remained strong even after the commodity peak of 2011 so it doesn't explain why house prices fell so much from 2011-19?

[Humanoid]

Why sell 15 years later?
Your debt would be irrelevant on a 1million property after 15 years. Your Rent would cover the loan easily and leave you plenty to live off....

[giseleesan]

Hi Pk, thanks for your amazing video. 🤗
I have 2 properties in Sydney only, and based on my deposit and borrowing capacity, I can buy two more properties, which 2 city do you reckon I should buy in?
And what price point should I be looking at?

Thanks in advance🙏🏻🙏🏻🙏🏻

[brett]

May I ask how the data indicated that Logan was a “No go zone” that was stated in some other videos. What data indicators were showing that Logan wasn’t a green light. Interested to know as a lesson learnt tip when looking at other areas.

[kjia]

No totally agree with you PK. Pick the winner is not for every investor. But having a firm timeframe, buy and hold is the winning formula that sets most investor successful. Remember revert back to the mean, high growth for the first few years sometimes means stagnant growth thereafter. I agree with having a portfolio with positive gearing and let the time to take care the rest, you would have a stress free retirement.

[s]

Hi, PK, can you share with us what sort of long-term growth you've achieved in some of the earlier properties you've bought 10 years ago? I want to make sure your strategy doesn't sacrifice long-term growth for short-term growth.

[MrTakeabow]

The production of the videos (graphics, intro etc) has levelled up! Good job dude.

[brendancoogan]

Hi PK - quick question, how did you/ or can you get around the debt to income ratio when getting loans for mortgages? The maximum is a ratio of 6x is what banks are telling me?