Most investors would think generating positive cash flow is the only way to go, but it actually has certain disadvantages worth considering. And, believe it or not, there are many positive cash flow properties that end up losing money. This article explains the dynamics behind positive cash flow and the associated risks.
By definition, positive cash flow property is a property investment that generates more income than expenses over the course of a year. Such property is usually found in areas of town where interest repayments are low and rents are high.
It’s always desirable to have some positive cash flow property investments in your portfolio, though sometimes it’s not always the fastest or easiest way to reach your financial goals. For instance, it can be a challenge to find a positive cash flow property. Also, negative cash flow property investments may yield much higher growth through capital gains over the long-term.
Here are some of the pros and cons of positive cash flow property investments you’ll need to consider.