Negative cash flow quickly turning positive

With savings on offer from lower interest rates, many investors may find that their properties turn from negative to positive cash flow, according to Smartline Personal Mortgage Advisers.

Looking at rate cuts totalling 2.2% over the last two years, investor activity has increased and loans of $300,000 are seeing interest savings of around $6,000.

“$6,000 a year or $115 a week is a considerable sum of money and would take many investment properties from being cash flow negative to positive,” said executive director for Smartline, Joe Sirianni.

“Removing the cash drain opens up opportunities for an increased number of investors to make the move for the first time, and the scope for some investors to add to their existing portfolio," Sirianni said.

“While there is widespread talk of a lack of consumer and business confidence, we are not seeing this at all".

Currently, he noted that the environment is favourable for investors with growing rental income. 

“However, it needs to be remembered that rates won’t stay at these record lows forever,” Mr Sirianni said.

“Investors need to ensure that the numbers add up on their property investment in the face of rising rates and that they can continue to afford their investment if it does become cash flow negative in the future."