It is interesting to observe just how many novice landlords and investors have been persuaded by so called property experts e.g. property consultants, agents, finance brokers etc to pursue capital growth rather than cashflow investing which, of course, is a strategy which could work very well within a rising market, provided the investor or landlord has the correct exit strategy and sells before the downturn arrives.

However, the truth of the matter is that what really distinguishes the professional investors from the novice ones is that the former always focus first on cashflow, then capital growth later. This is often why the novice investor can take such a long time, if ever, to achieve the financial freedom that they wanted from property in the first place. You may well ask what are the risks associated with choosing the wrong strategy taken on by ill-advised novices? Well, there are several but the key ones include novices becoming vulnerable to increases in interest rates which then affects cashflow, receiving marginal cashflow during occupancy, or worse, experiencing negative cashflow during rental voids, coping with negative equity which means you can’t even sell, enduring long periods with minimal capital growth and finally, being forced to sell at a reduced or ‘wholesale’ price. One wonders why they bothered in the first place as they end up worse than they began, with zero profit and in debt!

It therefore really does makes sense to get your investment strategy right the first time i.e. cashflow investing. We will continue with this subject in the next article.  If you can’t wait until then, you can find more information by clicking on the link below.

 http://www.ukpropertyladder.com/assured-positive-cashflow.html

 Sudeshna Choudhury