02
January

Real Estate Adelaide

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Positive cash flow properties are very attractive to most Adelaide property investors for several reasons. These types of Adelaide investment properties report a negative cash flow before the investor’s loss is reported to the tax office and subsequently show a positive cash flow after the investor receives their tax refund.

Positive cash flow properties give cash-based income due to a system of depreciation, whereby investors are able to claim the ‘loss of value’ of the building and chattels of the investment property. For every dollar of worth these items lose, the investor is entitled to receive a refund equal to your marginal rate of tax, which amounts to 30% for most people. As the loss is in value only the monetary refund received is retained by the investor. This cash then allows the investor to make up the shortfall between their investment income and their expenses.

One of the advantages of targeting positive cash flow properties as investment assets is that two properties that may seem alike on paper can have very different cash flow potential depending on what work has been done to the properties. A renovated or newer property is not only more likely to attract a better rent than its neighbour, but is also able to qualify for greater depreciation deductions and therefore better cash flow.
Nevertheless, there is no easy way to tell how much depreciation a property is likely to offer. A general indicator is that newer or recently renovated properties will offer higher depreciation deductions than older, unrenovated properties.

Another benefit of Adelaide cash flow positive properties is that they can supply the investor with a good source of regular and solid income. Properties of this type also offer an attractive combination of positive cash flow and solid capital growth in the one asset. They also create immediate capital growth in locations where these types of properties become available. This happens because ‘word of mouth’ spreads quickly and it doesn’t take long for investors to quickly buy up properties of this type. This in turn has the effect of instantly pushing up the market (Investment Property Adelaide).

Low-risk locations for cash flow positive properties can generally be found on the fringes of the Adelaide CBD and in areas such as Gladstone where houses are regarded as potential cash flow positive investments. Suitable Adelaide properties that offer positive cash flow benefits can also be found through dedicated property investing resources such as propertyinvestor.com.au which can offer valuable information and advice.