The 6 Types of Property Investment That Will Give You A Positive Cashflow

When you are looking for a property to invest in, don’t just limit yourself to choosing a house. There are six forms of property investment which will bring you a positive cashflow. Diversifying your portfolio might give you a better return and more flexibility in your finances.

Houses

There’s no doubt that buying a residence can be a great investment and bring you a positive cashflow. They are in high demand in all areas, and in areas of high growth, there’s usually a long waiting list of people looking to rent so you can name your price. Be careful to choose a property that is fully fenced and has easy access to schools, shops and transport – all desirable qualities to the potential tenant. You don’t need to buy a high-end property; most tenants just want a good roof over their heads. When you buy a recently built property, you can take advantage of any government depreciation legislation which is in force at the time. Your accountant will be able to offer the most up-to-date information on what you can claim.

Units

When you buy a unit, you are buying a residence and own a portion of the land the units are built on. The corresponding council fees such as rates are usually lower than you’d pay if you’d purchased a house. You will be part of a body corporate which makes decisions about the exterior maintenance of the units and costs will be split between the owners. If you choose a unit, look for one with minimal maintenance – no joint facilities like swimming pools or laundries. Those costs can eat into your cashflow. However, units are highly prized by tenants who don’t want to worry about maintaining a garden or the property’s exterior and your rental return is excellent.

Retail premises

While there can be quite a cost associated with buying retail premises such as a shop, the resulting positive cashflow can be worth it. Not only can you ask for substantial rent, but you may also be entitled to a percentage of sales made by the store owner. This is particularly true of stores in shopping centres.

Industrial

You might not have considered buying an industrial property, but they can produce high returns on your investment and generate positive cashflow. Most industrial businesses look for long term leases so your cashflow should be guaranteed for a long time. Industrial properties include factories but also storage facilities, warehouses, distribution centres and more.

Commercial

Commercial property includes office buildings but could also include a house in a commercially zoned area. You have probably seen many houses being turned into professional offices for dentists and legal firms. Some have become doctors or veterinary surgeries. These businesses are usually quite stable and in need of long-term leases. This ensures you have a stable rental income for years to come, and building modifications are often minimal.

Holiday Properties

Holiday properties can bring a positive cashflow if you choose them carefully. Remember that the property is unlikely to be rented out all year, so income won’t be consistent. However, holiday properties can command high rent which will make up for the quiet periods. If you’re looking for a holiday property, choose one which has close access to year-round attractions rather than seasonal appeal, so you have a good chance of being regularly booked out.

Finally, as a bonus tip, don’t overlook regional areas for your investment property. They are often areas of high growth and the demand for rentals – business and private – is high. Property prices are lower in regional areas, but the rental returns can be excellent.

If you are investing in property, it may be a good idea to diversify your portfolio so you’re not relying on one key source of income. Speak to your accountant or property advisor before you plan your strategy.