Before deciding on your preferred strategy, it pays to understand the fundamental principles that underpin cash flow and growth property investments.

Opting for a cash flow strategy, means investing in properties with a high rental yield and rental income that is greater than the total of the expenses of holding the asset.

Any additional income over and above the expenses can be used to pay down the loans and increase equity but often, the overall return upon sale is generally lower.

A cash flow strategy also means that you are getting a weekly income and realising the value of your investment over the short term.

Also, you will have more cash to cover regular and unforeseen expenses.

Well, what about growth assets?

Growth assets on the other hand, should double in value, three to four times in 30 years.

Also, you are moré likely to make a loss with a capital growth strategy and can take advantage of a negative gearing tax benefit.

In addition, Loan to Value Ratios, tend to be more generous because banks are more comfortable lending for properties in desirable growth areas in the large cities.

Also, without substantial capital growth to create equity, it takes longer to save up for your next investment property.

 It takes very high cash flow and several years of it to be able to pay down a mortgage, to have enough equity to buy again. However, just one year of normal capital growth can achieve double the opportunity.

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