The Initial Struggle: Misunderstanding Cash Flow and Negative Gearing 💭

When Mani and Raji first explored property investment, they were initially focused on newly built home and land packages—the same strategy they had used for their PPOR. However, they didn't fully understand how to assess the potential cash flow of a property. They had heard of negative gearing and thought it was a strategy to help them grow their portfolio.

​

However, negative gearing is not a strategy—it's merely a tool that allows investors to offset some of the losses incurred from a negatively geared property. It wasn’t the solution they were looking for.

​

This is where I stepped in to guide them through the fundamental concepts of cash flow generation. Using Future Secure Advisory's data-driven tools, demonstrated how cash flow works and explained how ChatGPT could help them calculate their property’s cash flow by factoring in key variables such as:

• Purchase price 💸

• Interest rate 📉

• Rental income 💵

• Expenses (Council fees, insurance, maintenance, etc.) 💼

The Turning Point: Understanding Cash Flow and Exploring New Investment Options 🔄

Through this educational process, Mani and Raji were able to see that property investment isn’t just about purchasing a newly built home. There are many other strategies, and one of the most powerful options is buying older properties—properties that are 40 years old or more, which may not be initially attractive to traditional buyers but still have strong growth potential over time 🌱.

​

I showed them how, even with an older property, they could achieve positive growth and, over time, shift from negatively geared to positively geared. By breaking down the numbers, they began to understand how the property could perform over the long term, even with initial negative gearing, and how it could eventually become a neutral to positive geared asset 📈.

The Path Forward: Due Diligence and Strategic Property Selection 🔍

Another challenge for Mani and Raji was understanding the due diligence process required when investing in older properties. As first-time investors, they needed to be sure the property they selected would deliver on its potential. This is where I guided them in making well-informed decisions about suburb selection, street profile, and analyzing the property condition to ensure they were making a sound investment.

​

We used the following process:

• Region and Suburb Selection: We chose a high-growth area in Queensland where property values were projected to rise in the coming years 📊.

• Street Profile Analysis: Ensuring the street and neighborhood would attract quality tenants and deliver long-term growth potential 🏡.

• Property Condition Review: We evaluated the property’s age and condition and decided it was worth investing in because it had been recently renovated—with a fully renovated kitchen, bathroom, and floors 🌟.

• Risk Analysis: I explained the risks involved, from maintenance to tenant turnover, and how the rental income would support the couple’s investment goals 💡.

With a clear understanding of the process, Mani and Raji felt confident moving forward.

The Property Secured: A Renovated Gem with Strong Rental Income 💎