Hello everyone,[biggrin]
I can hear the groans already.[agro2] I assume this topic has been done to death but I REALLY do need some clarification.I assume cash flow positive property is the same as positively geared property. Are there any differences or inconsistencies between the two concepts.
Secondly, when you talk of positively geared property, obviously this relates to the bottom line. In doing the figures, do you only look at the rental income minus costs such as body corporate, advertising, council etc. BUT EXCLUDE the cost of bank interest and depreciation benefits.
OR in arriving at a final figure do you INCLUDE deductions for bank interest and add in tax benefits flowing from depreciation.
There seems to be a great deal of confusion and obviously depending on who you talk to, one of the above versions will be bandied about. So I guess this question is probably one for the more experienced investors.
I look forward to your response — to get some clarification on an issue that has been troubling me for some time.[thumbsup2]
Regards
Hi Elika,
I like the definition Margaret Lomas uses – ultimately there is a bit of a little personal slant people put on the terms.
Positively geared – income exceeds all costs including rates, taxes, interest, repairs, body corporate (if appropriate), insurance, management fees and so on. Depreciation allowances are not required to provide a positive income flow.
Positive Cashflow – income exceeds all costs as above but only after tax deductions for depreciation are factored into the equation.
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
Thanks Derek,
clarity, finally.[biggrin][biggrin][biggrin]Regards
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